Euro Long Trade Held into German Industrial Production Data

The Euro is on the rise before Germany’s Industrial Production data amid speculation about an upside surprise. We continue to hold our long EURUSD trade.

Talking Points

Euro Higher Before German Industrial Production Data on Upside Surprise Bets
New Zealand Dollar Underperforms as RBNZ’s Wheeler Admits to Intervention
Australian Dollar Erases Early Losses After China’s Trade Data Tops Expectations

German Industrial Production figures are in focus in European trading hours. Consensus forecasts suggest a 3.8 percent year-on-year decline in March will mark the largest drawdown since January 2009. The Euro is on the upswing ahead of the release, with yesterday’s strong Factory Orders number possibility fueling speculation about another surprise. We continue to hold EURUSD long from 1.2934, initially looking for a rebound to take prices above the 1.32 figure over the coming days and weeks.

The New Zealand Dollar underperformed in overnight trade, falling as much as 1.4 percent on average against its leading counterparts, after RBNZ Governor Graeme Wheeler said the central bank had intervened to weaken the currency. Wheeler said the move was designed to “take the top off” the currency and added the Bank was capable of further intervention if the need arose. He also cited the limited impact of RBA rate cuts on the Aussie Dollar’s buoyancy as further justification.

The Australian Dollar erased losses sustained early in the overnight session after China’s Trade Balance report surprised to the upside. Exports grew 14.7 percent year-on-year in April, topping the 10 percent increase recorded in March and trumping forecasts calling for a 9.2 percent increase. The result underpinned hopes for resilience in overseas demand from Australia’s largest trading partner and weighed against RBA rate cut expectations. Investors are now pricing in a 41 percent probability of another 25bps reduction in the benchmark lending rate at the June policy meeting (according to data compiled by Credit Suisse).

Asia Session:

GMT

CCY

EVENT

ACT

EXP

23:01

GBP

BRC Sales Like-For-Like (YoY) (APR)

-2.2%

1.9%

1:46

CNY

Exports (YoY) (APR)

14.7%

9.2%

10.0%

1:46

CNY

Imports (YoY) (APR)

16.8%

13.0%

14.1%

1:46

CNY

Trade Balance ($) (APR)

$18.16B

$16.15B

-$0.88B

Euro Session:

GMT

CCY

EVENT

EXP/ACT

IMPACT