Talking Points:
New Zealand Dollar Gains as Terms of Trade Data Boost RBNZ Policy Bets
Euro May Continue Lower if German GDP, EZ PMI Revisions Disappoint
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The New Zealand Dollar narrowly outperformed in otherwise quiet overnight trade, rising as much as 0.2 percent on average against its leading counterparts. The move followed an unexpectedly upbeat Terms of Trade report. The ratio of export vs. import prices rose 0.3 percent in the second quarter, topping bets calling for a 3.5 percent decline. The improvement in the island nation’s external position appeared to bolster RBNZ monetary policy bets, with the Kiwi rising alongside New Zealand’s benchmark 10-year bond yield.
Looking ahead, a busy European data docket is headlined by the final revisions of second-quarter German GDP data and Augusts’ Eurozone Manufacturing PMI print. The former release is expected to confirm that output in the Euro area’s top economy shrank 0.2 percent in the three months through June, marking the first contraction in over a year. The latter is seen matching preliminary estimates showing manufacturing- and service-sector activity in the currency bloc grew at the slowest pace in 13 months.
Eurozone economic news-flow has increasingly deteriorated relative to consensus forecasts since the beginning of the year. Indeed, data from Citigroup suggests realized outcomes are underperforming economists’ bets by the widest margin since June 2013 as of last week. That suggests analysts continue to underestimate the degree of economic slowdown in the region, opening the door for additional downside surprises. Disappointing results on today’s releases may help stoke speculation about a forthcoming expansion of ECB stimulus at this week’s policy meeting, sending the Euro lower. We remain short EURUSD.
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Asia Session
GMT
CCY
EVENT
ACT
EXP
PREV
22:45
NZD
Terms of Trade Index (QoQ) (2Q)
0.3%
-3.5%
1.8%
23:30
AUD
AiG Performance of Mfg Index (AUG)
47.3
–
50.7
23:50
JPY
Capital Spending (2Q)
3.0%
4.1%
7.4%
23:50
JPY
Capital Spending excl Software (2Q)
1.9%
1.0%
8.3%
23:50
JPY
Company Profits (2Q)
4.5%
–
20.2%
23:50
JPY
Company Sales (2Q)
1.1%
–
5.6%
0:00
AUD
RPData/Rismark House Px (MoM) (AUG)
1.1%
–
1.6%
0:30
AUD
TD Securities Inflation (MoM) (AUG)
0.0%
–
0.2%
0:30
AUD
TD Securities Inflation (YoY) (AUG)
2.5%
–
2.6%
1:00
CNY
Manufacturing PMI (AUG)
51.1
51.3
51.7
1:30
AUD
Company Operating Profit (QoQ) (2Q)
-6.9%
-2.0%
2.0%
1:30
AUD
Inventories (QoQ) (2Q)
0.8%
0.3%
-1.7%
1:35
JPY
Markit/JMMA Manufacturing PMI (AUG F)
52.2
–
52.4
1:45
CNY
HSBC Manufacturing PMI (AUG F)
50.2
50.5
50.3
5:00
JPY
Vehicle Sales (YoY) (AUG)
–
0.6%
European Session
GMT
CCY
EVENT
EXP
PREV
IMPACT
6:00
EUR
German GDP s.a. (QoQ) (2Q F)
-0.2%
-0.2%
Medium
6:00
EUR
German GDP w.d.a. (YoY) (2Q F)
1.2%
1.2%
Medium
6:00
EUR
German GDP n.s.a. (YoY) (2Q F)
0.8%
0.8%
Medium
6:00
EUR
German Private Consumption (QoQ) (2Q)
0.2%
0.7%
Low
6:00
EUR
German Government Spending (QoQ) (2Q)
0.3%
0.4%
Low
6:00
EUR
German Capital Investment (QoQ) (2Q)
-1.3%
3.2%
Low
6:00
EUR
German Construction Investment (QoQ) (2Q)
-3.2%
3.6%
Low
6:00
EUR
German Domestic Demand (QoQ) (2Q)
–
1.9%
Low
6:00
EUR
German Exports (QoQ) (2Q)
0.2%
0.2%
Low
6:00
EUR
German Imports (QoQ) (2Q)
0.5%
2.2%
Low
6:30
AUD
Commodity Index SDR (YoY) (AUG)
–
-12.1%
Low
6:30
AUD
Commodity Index AUD (AUG)
–
92.1
Low
7:30
CHF
procure.ch Manufacturing PMI (AUG)
53.7
54.3
Medium
7:45
EUR
Markit/ADACI Italy Mfg PMI (AUG)
51
51.9
Low
7:50
EUR
Markit France Mfg PMI (AUG F)
46.5
46.5
Low
7:55
EUR
Markit/BME Germany Mfg PMI (AUG F)
52.0
52.0
Medium
8:00
EUR
Markit Eurozone Mfg PMI (AUG F)
50.8
50.8
Medium
8:30
GBP
Net Consumer Credit (JUL)
0.6B
0.4B
Low
8:30
GBP
Net Lending Sec. on Dwellings (JUL)
2.0B
2.1B
Low
8:30
GBP
Mortgage Approvals (JUL)
66.0K
67.2K
Medium
8:30
GBP
M4 Money Supply (MoM) (JUL)
–
0.1%
Low
8:30
GBP
M4 Money Supply (YoY) (JUL)
–
-0.6%
Low
8:30
GBP
M4 Ex IOFCs 3M Annualised (JUL)
4.3%
4.6%
Low
8:30
GBP
Markit Manufacturing PMI (AUG)
55.1
55.4
Medium
Critical Levels
CCY
Supp 3
Supp 2
Supp 1
Pivot Point
Res 1
Res 2
Res 3
EURUSD
1.3025
1.3089
1.3111
1.3153
1.3175
1.3217
1.3281
GBPUSD
1.6490
1.6541
1.6569
1.6592
1.6620
1.6643
1.6694
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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