Talking Points:

British Pound at Risk if Jobs Data Disappoints, Denting BOE Bets
Euro Vulnerable to Deeper Losses as ECB Rhetoric Stays Dovish
New Zealand Dollar Gains as Markets Position for RBNZ Rate Hike

May’s UK Jobless Claims data headlines the economic calendar in European hours. Applications for benefits are expected to have declined by 25,000 to mark the smallest drawdown in a year. UK news-flow has increasingly deteriorated relative to consensus forecasts over recent weeks, hinting analysts are overestimating the health of the economy and opening the door for downside surprises. A disappointing print may weigh against supportive BOE policy expectations, punishing the British Pound. We are positioning for a GBPUSD short trade setup.

Elsewhere, another packed calendar of scheduled commentary from ECB officials is ahead. Remarks from Governing Council members Ardo Hansson, Ewald Nowotny and Yves Mersch are all set to come across the wires. The ECB alluded to a forthcoming ABS purchase program as the next step in expanding its stimulus efforts and traders will be on the look-out for any details illuminating the operational details and timing of such a move. Rhetoric suggesting the QE-style effort is relatively close to implementation is likely to weigh on the Euro and we are looking for new EURUSD selling opportunities.

The New Zealand Dollar narrowly outperformed in otherwise quiet overnight trade. The move developed parallel to a rise in bond yields and a drop in New Zealand 3-month Bank Bill futures, hinting the advance reflected expectations of another interest rate hike at tomorrow’s RBNZ money policy meeting. Traders a pricing in a 95 percent probability of another 25bps increase in the benchmark lending rate, according to data from Credit Suisse. Live coverage of the RBNZ announcement begins at 20:45 GMT.

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