Talking Points:

Euro Unlikely to Find Lasting Cues in German Unemployment, CPI Reports
US 3Q GDP Slowdown May Not Amount to Major Setback for the US Dollar
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German Unemployment and CPI reports headline the economic calendar in European hours. Jobless ranks are expected to shrink by 4,000 in October, keeping the unemployment rate unchanged at 6.7 percent. Separately, the benchmark inflation rate is expected to edge higher to 0.9 percent after lingering at a four-year low of 0.8 percent through the third quarter.

On balance, neither data release seems likely to produce a lasting response from the Euro considering the outcomes’ limited implications for near-term ECB monetary policy. The central bank is still in the implementation phase of a medley of stimulus efforts and will likely want to see how things progress for some time after everything is in place. That means additional easing probably won’t materialize until next year, putting policy on auto-pilot in the interim.

Looking ahead, third-quarter US GDP figures will enter the spotlight. An annualized increase of 3 percent is expected, marking a slowdown from the 4.6 percent gain recorded in the three months through June. The latter number may have been exaggerated on a comparative basis by the weather-linked slump in the first three month of the year. With that in mind, a pullback closer to but still above the post-crisis average (2.2 percent) may not prove to be a major setback for the US Dollar, particularly after a seemingly confident FOMC opted against a dovish rhetoric shift at yesterday’s monetary policy announcement (as expected). We remain short EURUSD and long USDCHF.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

20:00

NZD

RBNZ Interest Rate Decision

3.50%

0:00

AUD

HIA New Home Sales (MoM) (SEP)

0.0%

–

3.3%

0:30

AUD

Import Price Index (QoQ) (3Q)

-0.8%

0.2%

-3.0%

0:30

AUD

Export Price Index (QoQ) (3Q)

-3.9%

-4.7%

-7.9%

2:00

JPY

Vehicle Production (YoY) (SEP)

-2.6%

–

-6.7%

European Session

GMT

CCY

EVENT

EXP

IMPACT