Talking Points:
Euro at Risk as German CPI, Regional PMI Data Guides ECB Policy Outlook
Australian Dollar Sinks as Soft Building Approvals Data Weighs on RBA Bets
Japanese Yen Lower as Chinese PMI Uptick Boosts Risk Appetite, Nikkei 225
The preliminary set of May’s German CPI figures headlines the economic calendar in European trading hours. The headline year-on-year inflation rate is expected to register at 1.1 percent, down from 1.3 percent recorded in the prior month. Final revisions of last month’s German, French and region-wide Manufacturing PMI readings are also on tap. On balance, news-flow from the Eurozone has proven increasingly disappointing relative to economists’ forecasts over recent months, opening the door for downside surprises. Such outcomes may amplify speculation about an expansion of ECB stimulus at this week’s policy meeting, weighing the Euro. We remain short EURUSD.
The Australian Dollar sank in overnight trade, down as much as 0.4 percent on average against its leading counterparts, after a disappointing set of Building Approvals figures. The report showed permits fell 5.6 percent in April, marking the largest month-on-month decline in 10 months. The Aussie’s move lower tracked a parallel swoon in the benchmark 10-year bond yield, suggesting the soft data set worked to undermine RBA policy bets ahead of tomorrow’s interest rate decision.
The Japanese Yen also came under pressure as the benchmark Nikkei 225 stock index advanced, sapping haven demand for the safety-linked currency. The swell in risk appetite likely followed a better-than-expected Chinese Manufacturing PMI print released over the weekend. The report showed factor-sector growth the world’s second-largest economy accelerated to the fastest pace in five months.
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Asia Session
GMT
CCY
EVENT
ACT
EXP
PREV
1:00
CNY
Manufacturing PMI (MAY)
50.8
50.7
50.4
23:30
AUD
AiG Perf of Manufacturing Index (MAY)
49.2
–
44.8
23:50
JPY
Capital Spending (1Q)
8.3%
5.8%
4.0%
23:50
JPY
Capital Spending excl Software (1Q)
7.4%
5.9%
2.8%
23:50
JPY
Company Profits (1Q)
20.2%
–
26.6%
23:50
JPY
Company Sales (1Q)
5.6%
–
3.8%
0:00
AUD
RPData/Rismark House Px (MoM) (MAY)
-1.9%
–
0.3%
0:30
AUD
TD Securities Inflation (MoM) (MAY)
0.3%
–
0.4%
0:30
AUD
TD Securities Inflation (YoY) (MAY)
2.9%
–
2.8%
1:30
AUD
Company Operating Profit (QoQ) (1Q)
3.1%
2.5%
2.5%
1:30
AUD
Inventories (QoQ) (1Q)
-1.7%
-0.4%
-0.6%
1:30
AUD
Building Approvals (MoM) (APR)
-5.6%
2.0%
-4.8%
1:30
AUD
Building Approvals (YoY) (APR)
1.1%
12.3%
20.9%
1:35
JPY
Markit/JMMA Manufacturing PMI (MAY F)
49.9
–
49.9
5:00
JPY
Vehicle Sales (YoY) (MAY)
–
-11.4%
6:30
AUD
Commodity Index AUD (MAY)
–
100.2
6:30
AUD
Commodity Index SDR (YoY) (MAY)
–
-12.6%
European Session
GMT
CCY
EVENT
EXP
PREV
IMPACT
7:30
CHF
Manufacturing PMI (MAY)
55.5
55.8
Low
7:45
EUR
Italian Manufacturing PMI (MAY)
53.6
54.0
Low
7:50
EUR
French Manufacturing PMI (MAY F)
49.3
49.3
Medium
7:55
EUR
Germany Manufacturing PMI (MAY F)
52.9
52.9
Medium
8:00
EUR
Eurozone Manufacturing PMI (MAY F)
52.5
52.5
Medium
8:30
GBP
Net Consumer Credit (APR)
0.8B
1.1B
Medium
8:30
GBP
Net Lending Sec. on Dwellings (APR)
1.7B
1.8B
Low
8:30
GBP
M4 Money Supply (MoM) (APR)
–
-2.3%
Low
8:30
GBP
M4 Money Supply (YoY) (APR)
–
-0.3%
Low
8:30
GBP
M4 ex IOFCs 3M Annualised (APR)
3.3%
2.9%
Low
8:30
GBP
Mortgage Approvals (APR)
64.5B
67.1K
Medium
8:30
GBP
PMI Manufacturing (MAY)
57.0
57.3
Medium
12:00
EUR
German CPI (MoM) (MAY P)
0.1%
-0.2%
High
12:00
EUR
German CPI (YoY) (MAY P)
1.1%
1.3%
High
12:00
EUR
German CPI – EU Harmonised (MoM) (MAY P)
0.1%
-0.3%
High
12:00
EUR
German CPI – EU Harmonised (YoY) (MAY P)
1.0%
1.1%
High
Critical Levels
CCY
Supp 3
Supp 2
Supp 1
Pivot Point
Res 1
Res 2
Res 3
EUR/USD
1.3526
1.3577
1.3606
1.3628
1.3657
1.3679
1.373
GBP/USD
1.6621
1.6685
1.6720
1.6749
1.6784
1.6813
1.6877
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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