The Euro is likely to look past German Industrial Production data to focus on potential stimulus expansion clues lurking within the ECB annual report.
Talking Points:
German Industrial Production, Swiss CPI Likely to Pass Without Fanfare
AQR Cues in the ECB Annual Report May Be Market-Moving for the Euro
Aussie Dollar Down, Japanese Yen Higher as Stocks Drop in Asian Trade
A relatively quiet European economic calendar is headlined by February’s German Industrial Production and March’s Swiss Consumer Price Index figures. The former report is due to the year-on-year output growth rate marginally slowed to 4.7 percent from the 5 percent recorded in February. The latter is set to put the headline inflation rate at -0.1 percent, matching the prior month’s result. Neither release is likely to produce a significant response from price action given their limited implications for traders’ ECB and SNB monetary policy outlook.
The release of the ECB Annual Report may prove of greater note. Traders continue to speculate on the possibility that the deepening disinflation will prompt the central bank to expand monetary stimulus. We’ve argued that Mario Draghi and company are waiting for their Asset Quality Review (AQR) to be well-enough along to reveal the gap in policy transmission that has produced cheap borrowing costs in the interbank space without arresting the slide in lending to the real economy. That will set the stage for crafting an easing effort that repairs or bypasses the hole in the stimulus delivery mechanism. With that in mind, an AQR progress report in the Annual Report may prove market-moving for the Euro.
The Australian Dollar underperformed in otherwise quiet overnight trade, sliding as much as 0.2 percent against its US namesake. The move appeared corrective after the Aussie outperformed against the greenback on Friday in the wake of a mild disappointment on March’s US nonfarm payrolls print. A selloff on Asian stock exchanges likewise didn’t offer any favors to the sentiment-linked survey. The MSCI Asia Pacific regional benchmark index fell 0.5 percent in what looked like playing catch-up to Friday’s selloff on Wall Street. The Japanese Yen traded higher as the risk-off mood bolstered haven demand for the haven currency.
Critical Levels
FXCM, L.L.C.® assumes no responsibility for errors, inaccuracies or omissions in these materials. FXCM, L.L.C.® does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXCM, L.L.C.® shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results.
Recommended Content
Editors’ Picks
EUR/USD holds above 1.0700 ahead of key US data
EUR/USD trades in a tight range above 1.0700 in the early European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays above 156.00 after BoJ Governor Ueda's comments
USD/JPY holds above 156.00 after surging above this level with the initial reaction to the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price flatlines as traders look to US PCE Price Index for some meaningful impetus
Gold price lacks any firm intraday direction and is influenced by a combination of diverging forces. The weaker US GDP print and a rise in US inflation benefit the metal amid subdued USD demand. Hawkish Fed expectations cap the upside as traders await the release of the US PCE Price Index.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.