Talking Points:
British Pound May Not Find Lasting Weakness in Soft UK Inflation Numbers
Yen Falls as S&P 500 Futures Rise, NZ Dollar Declines on RBNZ Outlook
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December’s UK CPI data headlines the economic calendar in European trading hours. Expectations call for the headline year-on-year inflation rate to edge downward to 0.7 percent, the lowest in over 12 years. A soft result may not yield significant downside pressure on the British Pound however.
The core CPI reading (which excludes the impact of energy prices, among other volatile items) is seen edging upward to 1.3 percent from the 1.2 percent reading posted in November. This suggests that – similarly to the Federal Reserve – the Bank of England may chalk up the slide in headline price growth to the transitory impact of the sinking cost of crude oil, meaning it won’t necessarily interpret a weak result as reason enough to delay interest rate hikes.
The Japanese Yen underperformed in otherwise quiet overnight trade, rising as much as S&P 500 futures recovered, pointing to firming risk appetite and putting pressure on the safety-linked currency. The New Zealand Dollar likewise traded lower as the island nation’s bond yields fell, hinting at ebbing RBNZ interest rate hike expectations. We have entered short NZDUSD.
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Asia Session
GMT
CCY
EVENT
ACT
EXP
PREV
21:00
NZD
ANZ Truckometer Heavy (MoM) (DEC)
2.1%
–
-2.8%
22:30
AUD
ANZ Roy Morgan Weekly Consumer Conf
112.0
–
111.7
23:50
JPY
BoP Current Account Balance (NOV)
¥433.0B
¥139.5B
¥833.4B
23:50
JPY
BoP Current Account Adjusted (NOV)
¥914.5B
¥692.5B
¥947.0B
23:50
JPY
Trade Balance BoP Basis (NOV)
-¥636.8B
-¥734.0B
-¥766.6B
23:50
JPY
Bank Lending Incl Trusts (YoY) (DEC)
2.6%
–
2.7%
23:50
JPY
Bank Lending Ex-Trusts (YoY) (DEC)
2.7%
–
2.8%
0:01
GBP
BRC Sales Like-For-Like (YoY) (DEC)
-0.4%
1.0%
0.9%
2:04
CNY
Trade Balance (DEC)
$49.61B
$49.00B
$54.48B
2:04
CNY
Exports (YoY) (DEC)
9.7%
6.0%
4.7%
2:04
CNY
Imports (YoY) (DEC)
-2.4%
-6.2%
-6.7%
4:30
JPY
Bankruptcies (YoY) (DEC)
-8.53%
–
-14.61%
5:00
JPY
Eco Watchers Survey Current (DEC)
45.2
44.0
41.5
5:00
JPY
Eco Watchers Survey Outlook (DEC)
46.7
–
44.0
European Session
GMT
CCY
EVENT
EXP/ACT
PREV
IMPACT
7:00
EUR
Germany Wholesale Price Index (MoM) (DEC)
–
-0.7%
Low
7:00
EUR
Germany Wholesale Price Index (YoY) (DEC)
–
-1.1%
Low
9:00
EUR
Italy Industrial Production (MoM) (NOV)
0.1%
-0.1%
Low
9:00
EUR
Italy Industrial Production wda (YoY) (NOV)
-2.7%
-3.0%
Low
9:00
EUR
Italy Industrial Production nsa (YoY) (NOV)
–
-3.0%
Low
9:30
GBP
CPI (MoM) (DEC)
0.1%
-0.3%
High
9:30
GBP
CPI (YoY) (DEC)
0.7%
1.0%
High
9:30
GBP
CPI Core (YoY) (DEC)
1.3%
1.2%
High
9:30
GBP
RPI (MoM) (DEC)
0.1%
-0.2%
Medium
9:30
GBP
RPI (YoY) (DEC)
1.6%
2.0%
Medium
9:30
GBP
RPI Ex Mort Int.Payments (YoY) (DEC)
1.6%
2.0%
Medium
9:30
GBP
PPI Input NSA (MoM) (DEC)
-2.6%
-1.0%
Low
9:30
GBP
PPI Input NSA (YoY) (DEC)
-11.5%
-8.8%
Low
9:30
GBP
PPI Output NSA (MoM) (DEC)
-0.3%
0.2%
Medium
9:30
GBP
PPI Output NSA (YoY) (DEC)
-0.4%
-0.1%
Medium
9:30
GBP
PPI Output Core NSA (MoM) (DEC)
-0.1%
0.5%
Low
9:30
GBP
PPI Output Core NSA (YoY) (DEC)
1.2%
1.4%
Low
9:30
GBP
ONS House Price (YoY) (NOV)
9.8%
10.4%
Medium
Critical Levels
CCY
Supp 3
Supp 2
Supp 1
Pivot Point
Res 1
Res 2
Res 3
EURUSD
1.1660
1.1745
1.1790
1.1830
1.1875
1.1915
1.2000
GBPUSD
1.4965
1.5060
1.5116
1.5155
1.5211
1.5250
1.5345
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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Source: Daily fx