Talking Points:
- Euro May Bounce Absent a Major Disappointment on German GDP Print
- Yen Falls as Asian Stocks Advance, NZ Dollar Gains on Retail Sales Data
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The preliminary set of second-quarter German GDP figures headlines the economic calendar in European hours. Output is expected to shrink 0.1 percent compared with the prior period, marking the first negative reading since the fourth quarter of 2012. Economic data outcomes from the currency bloc have deteriorated relative to consensus forecasts over recent weeks. This suggests that analysts are underestimating the degree of malaise in the region, opening the door for a downside surprise. Such an outcome may boost ECB stimulus expansion bets, weighing on the Euro.
It ought to be noted however that recent survey data has argued for a re-acceleration at the start of the third quarter, so Euro selling pressure may prove restrained absent a particularly dramatic miss on the headline GDP figure. Indeed, the single currency proved to be broadly resilient following a deeply disappointing German ZEW Survey print earlier in the week, hinting the short-EUR trade may have become crowded and asymmetrically prone to upside versus downside volatility. Indeed, the CFTC’s Commitment of Traders report shows speculative net-short positioning hit a two-year high last week.For its part, the chart setup appears to reinforce the possibility of an upswing.
The Japanese Yen underperformed in overnight trade, sliding as much as 0.2 percent against its leading counterparts, as a rally on Asian stock exchanges undermined demand for the safe-haven currency. The MSCI Asia Pacific regional benchmark equity index added 0.2 percent. The New Zealand Dollar was best-supported among the majors following a strong set of Retail Sales figures. Receipts adjusted for inflation rose 1.2 percent in the second quarter, topping forecasts calling for a 1.0 percent gain. The Kiwi added almost 0.4 percent on average against its G10 FX peers.
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Asia Session
GMT | CCY | EVENT | ACT | EXP | PREV |
22:30 | NZD | Business NZ Perf of Mfg Index (JUL) | 53.0 | - | 53.4 |
22:45 | NZD | Retail Sales Ex Inflation (QoQ) (2Q) | 1.2% | 1.0% | 0.8% |
23:01 | GBP | RICS House Price Balance (JUL) | 49% | 51% | 52% |
23:50 | JPY | Machine Orders (YoY) (JUN) | -3.0% | 3.0% | -14.3% |
23:50 | JPY | Machine Orders (MoM) (JUN) | 8.8% | 15.3% | -19.5% |
3:00 | NZD | Non Resident Bond Holdings (JUL) | 65.1% | - | 64.2% |
European Session
GMT | CCY | EVENT | EXP | PREV | IMPACT |
5:30 | EUR | French GDP (QoQ) (2Q P) | 0.1% | 0.0% | Medium |
5:30 | EUR | French GDP (YoY) (2Q P) | 0.3% | 0.7% | Medium |
6:00 | EUR | German GDP s.a. (QoQ) (2Q P) | -0.1% | 0.8% | High |
6:00 | EUR | German GDP w.d.a. (YoY) (2Q P) | 1.4% | 2.3% | High |
6:00 | EUR | German GDP n.s.a. (YoY) (2Q P) | 1.3% | 2.5% | High |
7:15 | CHF | Producer & Import Prices (MoM) | 0.0% | 0.0% | Low |
7:15 | CHF | Producer & Import Prices (YoY) | -0.8% | -0.8% | Low |
8:00 | EUR | ECB Publishes Monthly Report | - | - | Medium |
9:00 | EUR | Eurozone GDP s.a. (QoQ) (2Q A) | 0.1% | 0.2% | High |
9:00 | EUR | Eurozone GDP s.a. (YoY) (2Q A) | 0.7% | 0.9% | High |
9:00 | EUR | Eurozone CPI (MoM) (JUL) | -0.6% | 0.1% | Medium |
9:00 | EUR | Eurozone CPI (YoY) (JUL F) | 0.4% | 0.4% | Medium |
9:00 | EUR | Eurozone CPI - Core (YoY) (JUL F) | 0.8% | 0.8% | Medium |
Critical Levels
CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
EURUSD | 1.3228 | 1.3301 | 1.3333 | 1.3374 | 1.3406 | 1.3447 | 1.3520 |
GBPUSD | 1.6423 | 1.6581 | 1.6635 | 1.6739 | 1.6793 | 1.6897 | 1.7055 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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