Eurozone PMI figures may mean more for the Japanese Yen than the Euro if soft outcomes feed global slowdown fears and trigger market-wide risk aversion.
Talking Points:
Soft Eurozone PMI Data May Mean More for Risk Appetite Than the Euro
New Zealand Dollar Swooned as Soft CPI Data Sank RBNZ Rate Hike Bets
See Economic Releases Directly on Your Charts with the DailyFX News App
The preliminary set of October’s Eurozone PMI figures headlines the economic calendar in European hours. The region-wide composite reading is due to show the pace of manufacturing- and service-sector activity growth slowed for a third consecutive month, yielding the weakest results in 14 months. A soft print may carry greater implications for overall risk appetite than the Euro however.
The ECB seems resigned to complacency in the near term. Financial conditions in the region have deteriorated since mid-September even as the central bank introduced negative deposit rates and conducted its first TLTRO operation. Economic data outcomes swooned relative to expectations over the same period, pointing to trouble on the growth front. In response, ECB officials have counter-intuitively used public speaking opportunities to play down expectations for the upcoming asset purchase program.
On balance, this means that weak PMI readings are unlikely to be a strong negative catalyst for the single currency in as much as they probably won’t herald a forceful near-term response from Mario Draghi and company. Such results may amplify increasingly acute global slowdown fears however, fueling risk aversion and boosting demand for safety-linked assets like the Japanese Yen. We have entered short GBPJPY.
The New Zealand Dollar underperformed in overnight trade, dropping as much as 1.1 percent on average against its leading counterparts. The move tracked a slide in New Zealand bond yields as RBNZ interest rate hike bets unwound following a disappointing third-quarter CPI report. The headline year-on-year inflation rate unexpectedly dropped to 1 percent, the lowest in over a year.
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 fluctuates near 1.0700 after US data
EUR/USD stays in a consolidation phase at around 1.0700 in the American session on Wednesday. The data from the US showed a strong increase in Durable Goods Orders, supporting the USD and making it difficult for the pair to gain traction.
USD/JPY refreshes 34-year high, attacks 155.00 as intervention risks loom
USD/JPY is renewing a multi-decade high, closing in on 155.00. Traders turn cautious on heightened risks of Japan's FX intervention. Broad US Dollar rebound aids the upside in the major. US Durable Goods data are next on tap.
Gold stays in consolidation above $2,300
Gold finds it difficult to stage a rebound midweek following Monday's sharp decline but manages to hold above $2,300. The benchmark 10-year US Treasury bond yield stays in the green above 4.6% after US data, not allowing the pair to turn north.
Worldcoin looks set for comeback despite Nvidia’s 22% crash Premium
Worldcoin price is in a better position than last week's and shows signs of a potential comeback. This development occurs amid the sharp decline in the valuation of the popular GPU manufacturer Nvidia.
Three fundamentals for the week: US GDP, BoJ and the Fed's favorite inflation gauge stand out Premium
While it is hard to predict when geopolitical news erupts, the level of tension is lower – allowing for key data to have its say. This week's US figures are set to shape the Federal Reserve's decision next week – and the Bank of Japan may struggle to halt the Yen's deterioration.