The Euro may fall as slowing inflation boosts ECB easing expectations while the Dollar may recover as S&P 500 futures point to risk aversion into the week-end.
Talking Points
Euro May See Selling Pressure as Eurozone CPI Drop Drives ECB Easing Bets
S&P 500 Futures Point to Risk Aversion, Hinting US Dollar May Bounce Ahead
Yen Sold as Japanese Industrial Production Grows, Cabinet Passes Stimulus
The preliminary estimate of November’s Eurozone CPIreading headlines the calendar in European hours. Expectations call for the headline inflation rate to drop to 2.4 percent, the lowest in four months. The outcome may weigh on the Euro as forex traders take softening price pressure to mean the ECB has added room for further easing amid signs of deepening recessionin the wake of deteriorating economic data (particularly the recent run of region-wide PMI figures).
On the sentiment front, S&P 500 futures are pointing lower to warn a risk-off mood may prevail through the end of the trading week, boosting the safety-linked US Dollar against most of its counterparts. Chatter from the sidelines of US “fiscal cliff” negotiations remains critical. Congressional Budget Office (CBO) estimates the spending cuts and tax hikes to be triggered at the turn of the year will tip the US into recession. This makes securing a deal to avoid the “cliff” critical to underpin risk appetite in an environment where traders are depending on recovery in the world’s top economy to offset headwinds from Europe and China.
The Japanese Yen underperformed in overnight trade, down against all of its major counterparts, as a rally in Asian stocks eroded demand for the haven currency. The MSCI Asia Pacific regional benchmark index added 0.5 percent after Japan’s cabinet approved a second fiscal stimulus package worth ¥880 billion and Industrial Production unexpectedly rose in October, adding 1.8 percent. Economists expected output shrink 2 percent. The result marked the largest increase in 10 months.
Asia Session: What Happened
GMT
CCY
EVENT
ACT
EXP
PREV
21:45
NZD
Building Permits (MoM) (OCT)
-1.5%
0.0%
7.6% (R-)
23:15
JPY
Nomura/JMMA Manufacturing PMI (NOV)
46.5
–
46.9
23:30
JPY
Jobless Rate (OCT)
4.2%
4.2%
4.2%
23:30
JPY
Job-To-Applicant Ratio (OCT)
0.8
0.8
0.81
23:30
JPY
Household Spending (YoY) (OCT)
-0.1%
-0.8%
-0.9%
23:30
JPY
National CPI (YoY) (OCT)
-0.4%
-0.4%
-0.3%
23:30
JPY
National CPI Ex-Fresh Food (YoY) (OCT)
0.0%
-0.1%
-0.1%
23:30
JPY
National CPI Ex Food, Energy (YoY) (OCT)
-0.5%
-0.5%
-0.6%
23:50
JPY
Industrial Production (MoM) (OCT P)
1.8%
-2.0%
-4.1%
23:50
JPY
Industrial Production (YoY) (OCT P)
-4.3%
-8.0%
-8.1%
0:01
GBP
GfK Consumer Confidence Survey (NOV)
-22
-30
-30
0:30
AUD
Private Sector Credit (MoM) (OCT)
0.1%
0.3%
0.3%
0:30
AUD
Private Sector Credit (YoY) (OCT)
3.8%
4.1%
4.0%
1:35
CNY
MNI Business Sentiment Indicator (NOV)
53.78
–
51.86
2:00
NZD
Money Supply M3 (YoY) (OCT)
5.8%
–
6.4%
4:00
JPY
Vehicle Production (YoY) (OCT)
-12.4%
–
-12.4%
5:00
JPY
Housing Starts (YoY) (OCT)
25.2%
10.1%
15.5%
5:00
JPY
Annualized Housing Starts (OCT)
0.978M
0.852M
0.866M
5:00
JPY
Construction Orders (YoY) (OCT)
-13.8%
–
3.6%
Euro Session: What to Expect
GMT
CCY
EVENT
EXP
PREV
IMPACT
7:00
EUR
German Retail Sales (MoM) (OCT)
-0.4%
1.5%
Medium
7:00
EUR
German Retail Sales (YoY) (OCT)
-0.3%
-3.1%
Medium
7:45
EUR
French Producer Prices (MoM) (OCT)
0.2%
0.3%
Low
7:45
EUR
French Producer Prices (YoY) (OCT)
2.9%
2.9%
Low
7:45
EUR
French Consumer Spending (YoY) (OCT)
-0.5%
-0.3%
Low
7:45
EUR
French Consumer Spending (MoM) (OCT)
-0.2%
0.1%
Low
8:00
CHF
KOF Swiss Leading Indicator (NOV)
1.6
1.67
Medium
9:00
EUR
Italian Unemployment Rate s.a. (OCT P)
10.9%
10.8%
Low
9:00
EUR
Italian Unemployment Rate s.a. (3Q)
10.7%
10.6%
Low
10:00
EUR
Italian CPI (NIC incl. tobacco) (MoM) (NOV P)
-0.1%
0.0%
Low
10:00
EUR
Italian CPI (NIC incl. tobacco) (YoY) (NOV P)
2.7%
2.6%
Low
10:00
EUR
Italian CPI – EU Harmonized (MoM) (NOV P)
-0.1%
0.3%
Low
10:00
EUR
Italian CPI – EU Harmonized (YoY) (NOV P)
2.8%
2.8%
Low
11:00
EUR
Italian PPI (MoM) (OCT)
-0.1%
-0.1%
Low
11:00
EUR
Italian PPI (YoY) (OCT)
2.8%
2.8%
Low
10:00
EUR
Euro-Zone Unemployment Rate(OCT)
11.7%
11.6%
Medium
10:00
EUR
Euro-Zone CPI Estimate (YoY) (NOV)
2.4%
2.5%
High
Critical Levels **
CCY
SUPPORT
RESISTANCE
EURUSD
1.2941
1.3052
GBPUSD
1.6013
1.6076
** Intraday support and resistance levels are derived from Pivot Points
— Written by Ilya Spivak, Currency Strategist for Dailyfx.com
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