Talking Points:
Revised German GDP Data Unlikely to Generate Lasting Euro Volatility
US Consumer Confidence, Comments from Fed’s Tarullo in the Spotlight
Global Slowdown Fears, Fed “Taper” Conviction May Sink Risk Trends
The final revision of fourth-quarter German GDP figures headlines the economic calendar in European hours. The early estimate showing the economy added 0.4 percent from the prior quarter is expected to be confirmed, marking a slight acceleration following a 0.3 percent gain in the three months through September 2013. While a pickup in the pace of economic growth is certainly not a bad thing per se, its ability to meaningfully boost the Euro is likely limited.
As we noted yesterday, the ECB’s narrow focus on price stability means broad economic activity readings are unlikely to have much impact on price action if they don’t necessarily translate into policy speculation. With that in mind, the revelation of a marginal pickup in the pace of German output growth may pass with little fanfarein as much as it would do little to countervail the slide in headline CPI readings and priced-in inflation expectations over recent months.
Later in the day, the spotlight shifts to February’s US Consumer Confidence report. Expectations point to a slight pullback after the index hit a five-month high in January. Meanwhile, Fed Governor Daniel Tarullo is scheduled to speak. Recent commentary from members of rate-setting FOMC committee has uniformly favored continued “tapering” of QE asset purchases, a view Mr. Tarullo is likely to support as well.
On balance, this stands to direct the spotlight at the apparent disparity between disappointing US news-flow and the Fed’s commitment to scaling back monetary stimulus. Last week, this toxic mixture seemed to meaningfully slow the rapid recovery in risk sentiment (as represented by the S&P 500) launched in the beginning of the month. More of the same may begin to increasingly weigh on global growth expectations and spark a renewed round of risk aversion, an outcome likely to benefit the US Dollar and the Japanese Yen against their top counterparts.
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Asia Session
GMT
CCY
EVENT
ACT
EXP
PREV
23:50
JPY
Corporate Service Price (YoY)
0.8%
1.2%
1.1%
2:00
NZD
RBNZ 2yr Inflation Expectation
2.33%
–
2.34%
2:00
CNY
Conference Board Leading Index (JAN)
1.2%
–
0.8%
5:00
JPY
Small Business Confidence
50.6
–
51.3
European Session
GMT
CCY
EVENT
EXP
PREV
IMPACT
7:00
EUR
German GDP s.a. (QoQ) (4Q F)
0.4%
0.4%
Medium
7:00
EUR
German GDP w.d.a. (YoY) (4Q F)
1.4%
1.4%
Medium
7:00
EUR
German GDP n.s.a. (YoY) (4Q F)
1.3%
1.3%
Medium
7:00
EUR
German Capital Investment (4Q)
0.8%
1.6%
Low
7:00
EUR
German Construction Investment (4Q)
0.8%
2.4%
Low
7:00
EUR
German Domestic Demand (4Q)
0.2%
0.7%
Low
7:00
EUR
German Exports (4Q)
1.7%
0.1%
Low
7:00
EUR
German Imports (4Q)
1.3%
0.8%
Low
7:00
EUR
German Private Consumption (4Q)
-0.1%
0.1%
Low
7:00
EUR
German Government Spending (4Q)
0.2%
0.5%
Low
9:30
GBP
BBA Loans for House Purchase (JAN)
47150
46521
Low
10:00
EUR
EU Issues Winter Economic Forecasts
–
–
Medium
11:00
GBP
CBI Reported Sales (FEB)
15
14
Low
Critical Levels
CCY
Supp 3
Supp 2
Supp 1
Pivot Point
Res 1
Res 2
Res 3
EUR/USD
1.3614
1.3676
1.3706
1.3738
1.3768
1.3800
1.3862
GBP/USD
1.6450
1.6545
1.6601
1.6640
1.6696
1.6735
1.6830
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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