Euro May Overlook German ZEW Data as Traders Await ECB Meeting

Talking Points:

US Dollar Outperforms on Firming Fed Policy Bets, Yen Falls on Risk Swell
Euro May Overlook German ZEW as Traders Await ECB Meeting Outcome
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The US Dollar outperformed in overnight trade, rising as much as 0.3 percent on average against its leading counterparts. The move tracked an advance in front-end Treasury bond yields, suggesting that firming Federal Reserve monetary policy expectations were behind the move.

The New Zealand Dollar bore the brunt of the greenback’s advance, dropping as much as 0.8 percent alongside rates on the island nation’s five-year note, seemingly reflecting erosion in the RBNZ rate hike outlook. We remain short NZDUSD.

The Japanese Yen likewise declined, falling as much as 0.6 percent. Risk trends look to have sparked the selloff. The MSCI Asia Pacific regional benchmark stock index rose 0.4 percent, sapping demand for the safety-linked unit.

January’s German ZEW survey of investor confidence headlines the economic calendar in European trading hours. The forward-looking Expectations index is expected to advance for a third consecutive month, hitting the strongest level since April.

The outcome may not offer meaningful support to the Euro however considering the limited implications of an improvement for monetary policy bets. Investors are also unlikely to be willing to commit to a firm directional bias this week’s much-anticipated ECB rate decision.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

21:00

NZD

NZIER Business Opinion Survey (4Q)

–

22:30

AUD

ANZ Roy Morgan Weekly Consumer Conf

113.6

–

112.0

2:00

CNY

Fixed Assets Ex Rural YTD (YoY) (DEC)

15.7%

15.8%

2:00

CNY

Retail Sales YTD (YoY) (DEC)

12.0%