The Euro may correct higher if better-than-expected Germany ZEW data helps trigger profit-taking on speculative bets against the single currency.
Talking Points:
Euro May Correct Higher on Upbeat German ZEW Survey Outcome
NZ Dollar Sold in Asia as Housing Data Dents RBNZ Rate Hike Bets
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Augusts’ German ZEW Survey of investor confidence headlines the economic calendar in European hours. The forward-looking Expectations index is expected to print at 17.0, marking the lowest reading since December 2012. Eurozone economic news-flow has been improving relative to consensus forecasts over the past three weeks, opening the door for an upside surprise.
Speculative net-short Euro positioning hit a two-year high last week according to the CFTC’s Commitment of Traders report. In the absence of a deeper push into dovish territory from the ECB at last week’s policy meeting, a corrective upswing seems reasonable before selling pressure returns in force and an upbeat ZEW outcome may prove to be just the spark needed to set off profit-taking.
The New Zealand Dollar underperformed in overnight trade, falling as much as 0.3 percent on average against its leading counterparts. The currency sank to session lows after data from REINZ showed house sales fell 13 percent year-on-year in July. The Kiwi’s drop followed a decline in New Zealand’s front-end bond yields, pointing to fading RBNZ rate hike bets.
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