The Euro is likely to look past what could be a disappointing outcome on Germany’s ZEW investor confidence gauge before this week’s EU leaders’ summit.
Talking Points
German ZEW May Surprise Lower But Euro Follow-Through Unlikely
US Dollar May Rise as S&P 500 Futures Point to Risk-Averse Mood
December’s German ZEW Survey of investor confidence is in focus on the European economic calendar. Forecasts suggest the forward-looking Expectations index will continue to moderate, showing sentiment remains net negative but by a smaller margin. The gauge has closely tracked Italian bond yields, suggesting the evolution of the Eurozone debt crisis is the key trend-setter.
Rates on the benchmark Italian 10-year debt have edged higher this month, pointing to a pickup in funding stress and warning the ZEW reading may fall short of expectations. While this may put near-term downward pressure on the Euro, follow-through is likely to prove limited. Indeed, yields themselves are a far timelier indicator of investors’ confidence in Eurozone crisis containment efforts than the ZEW reading. Furthermore, traders are unlikely to commit to a firm directional bias until the outcome of this week’s EU Leaders’ summit.
On the sentiment front, S&P 500 futures are pointing lower, arguing for a risk-off mood heading into European trading hours and hinting the safety-linked US Dollar may have scope to advance against most of its top counterparts. Trading was muted in the overnight session, with the major currencies locked in narrow consolidation ranges.
Asia Session: What Happened
GMT
CCY
EVENT
ACT
EXP
PREV
17:00
NZD
REINZ House Sales (YoY) (NOV)
24.1%
–
32.6%
17:00
NZD
REINZ Housing Price Index (MoM) (NOV)
1.4%
–
1.5%
17:00
NZD
REINZ Housing Price Index (NOV)
3544.4
–
3495.1
21:00
NZD
New Zealand Manpower Survey (1Q)
15%
–
19%
21:00
AUD
Australia Manpower Survey (1Q)
7%
–
9%
21:45
NZD
NZ Card Spending – Retail (MoM) (NOV)
0.5%
0.5%
0.4%
21:45
NZD
NZ Card Spending (MoM) (NOV)
0.7%
–
0.5%
23:00
NZD
QV House Prices (YoY) (NOV)
5.7%
–
5.7%
23:50
JPY
Japan Money Stock M2 (YoY) (NOV)
2.1%
2.3%
2.3%
23:50
JPY
Japan Money Stock M3 (YoY) (NOV)
1.9%
1.9%
2.0%
0:00
JPY
Japan Manpower Survey (1Q)
–
11
11.0%
0:01
GBP
RICS House Price Balance (NOV)
-9.0%
-5.0%
-7.0%
0:30
AUD
NAB Business Conditions (NOV)
-5
–
-5
0:30
AUD
NAB Business Confidence (NOV)
-9
–
-1
2:00
CNY
New Yuan Loans (NOV)
522.9B
550.0B
505.2B
Euro Session: What to Expect
GMT
CCY
EVENT
EXP/ACT
PREV
IMPACT
6:30
EUR
French Nonfarm Payrolls (QoQ) (3Q F)
-0.3% (A)
-0.3%
Low
7:00
EUR
German Wholesale Price Index (MoM) (NOV)
-0.7% (A)
-0.6%
Low
7:00
EUR
German Wholesale Price Index (YoY) (NOV)
3.2% (A)
4.6%
Low
10:00
EUR
German ZEW Survey (Current Situation) (DEC)
6.0
5.4
Medium
10:00
EUR
German ZEW Survey (Econ Sentiment) (DEC)
-11.5
-15.7
High
10:00
EUR
Euro-zone ZEW Survey (Econ Sentiment) (DEC)
–
-2.6
Medium
Critical Levels
CCY
SUPPORT
RESISTANCE
EURUSD
1.2899
1.2989
GBPUSD
1.6027
1.6110
— Written by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak
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Source: Daily fx