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Euro May Fall Further as Soft CPI Hints More ECB Easing Ahead

29 February 2016, 11:21

Euro May Fall Further as Soft CPI Hints More ECB Easing Ahead

Talking Points:

NZ Dollar falls as data drives rate cut bets, Yen gains as S&P 500 futures fall
Euro downturn may continue as soft inflation data beckons more ECB easing
Global stimulus expansion hopes may offer support to risk sentiment trends

The New Zealand Dollar underperformed to start the trading week after a string of disappointing data releases fueled RBNZ rate cut speculation. A measure of business confidence from ANZ Bank fell by the most since October. A separate report showed Building Permits fell 8.2 percent, making for the biggest drawdown since September 2014. The Kiwi fell alongside New Zealand bond yields, suggesting the soft results spurred easing bets. Meanwhile, the Yen is trading higher as S&P 500 futures open lower, hinting at a risk-off mood inspiring liquidation of carry trades funded in terms of the perennially low-yielding Japanese unit.

Looking ahead, the preliminary set of February’s Eurozone CPI figures is in focus. The core year-on-year inflation rate is expected to decline to 0.9 percent from the 1.0 percent recorded in January. Last week’s analogous report from Germany – the currency bloc’s largest economy – proved disappointing relative to consensus forecasts. A similar result on the region-wide metric may boost bets on ECB stimulus expansion at next month’s policy meeting, weighing on the Euro.The prospect of an increase in global accommodation my help risk appetite however,offering support to sentiment-linked FX including the Australian Dollar.

Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
21:30	NZD	ANZ Activity Outlook (FEB)	25.5	-	34.4
21:30	NZD	ANZ Business Confidence (FEB)	7.1	-	23.0
21:45	NZD	Building Permits (MoM) (JAN)	-8.2%	-	2.3%
23:50	JPY	Industrial Production (MoM) (JAN P)	3.7%	3.2%	-1.7%
23:50	JPY	Industrial Production (YoY) (JAN P)	-3.8%	-3.8%	-1.9%
23:50	JPY	Retail Trade (YoY) (JAN)	-0.1%	0.1%	-1.1%
23:50	JPY	Retail Sales (MoM) (JAN)	-1.1%	0.1%	-0.3%
23:50	JPY	Dept. Store, Supermarket Sales (JAN)	1.0%	-0.2%	0.0%
00:00	AUD	Melbourne Institute Inflation (MoM) (FEB)	-0.2%	-	0.4%
00:00	AUD	Melbourne Institute Inflation (YoY) (FEB)	2.1%	-	2.3%
00:01	GBP	Lloyds Business Barometer (FEB)	28	-	45
00:30	AUD	Inventories SA (QoQ) (4Q)	-0.4%	0.1%	0.0%
00:30	AUD	Company Operating Profit (QoQ) (4Q)	-2.8%	-1.8%	1.4%
00:30	AUD	Private Sector Credit (MoM) (JAN)	0.5%	0.5%	0.5%
00:30	AUD	Private Sector Credit (YoY) (JAN)	6.5%	6.5%	6.6%
02:00	NZD	Money Supply M3 (YoY) (JAN)	7.6%	-	8.1%
04:00	JPY	Vehicle Production (YoY) (JAN)	-5.8%	-	-2.3%
05:00	JPY	Housing Starts (YoY) (JAN)	0.2%	-0.3%	-1.3%
05:00	JPY	Annualized Housing Starts (JAN)	0.873M	0.870M	0.860M
05:00	JPY	Construction Orders (YoY) (JAN)	-13.8%	-	14.8%

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
07:00	EUR	German Import Price Index (MoM) (JAN)	-1.0%	-1.2%	Low
07:00	EUR	German Import Price Index (YoY) (JAN)	-3.4%	-3.1%	Low
07:00	EUR	German Retail Sales (MoM) (JAN)	0.3%	0.6%	Low
07:00	EUR	German Retail Sales (YoY) (JAN)	1.8%	1.5%	Low
08:00	CHF	KOF Leading Indicator (FEB)	99.3	100.3	Low
08:00	CHF	Total Sight Deposits (FEB 26)	-	476.2B	Low
08:00	CHF	Domestic Sight Deposits (FEB 26)	-	411.6B	Low
09:30	GBP	Net Consumer Credit (JAN)	1.4B	1.2B	Medium
09:30	GBP	Net Lending Sec. on Dwellings (JAN)	3.7B	3.2B	Low
09:30	GBP	Mortgage Approvals (JAN)	74.0K	70.8K	Medium
09:30	GBP	M4 Money Supply (MoM) (JAN)	-	-0.2%	Low
09:30	GBP	M4 Money Supply (YoY) (JAN)	-	0.2%	Low
09:30	GBP	M4 Ex. IOFCs 3M Annualised (JAN)	-	4.0%	Low
10:00	EUR	Eurozone CPI Estimate (YoY) (FEB)	0.0%	0.3%	High
10:00	EUR	Eurozone CPI Core (YoY) (FEB A)	0.9%	1.0%	High