Currency Markets To Look Past European Data, Focus On Fed Chatter

By Ilya Spivak, Currency Strategist

Talking Points
  • Swiss Jobs, German Trade Data Unlikely to Prove Market-Moving
  • Fed Speaking Calendar in Focus as QE3 Hopes Continue to Circulate
  • Aussie, NZ Dollars Sold as China Unexpectedly Posts Trade Surplus
  • Yen Erases Losses After Bank of Japan Opts Not to Expand Stimulus

Markets are likely to look past the Europeandata docket to focus on the Federal Reservespeaking calendar as the QE3 debate continues to dominate priceaction in the aftermath of Friday’s disappointing US jobs report . Comments perceived as increasing theprobability of further stimulus are likely to weigh on the US Dollar (ticker: USDollar ) while those reinforcing the status quo willprobably produce the opposite effect.

Dallas Fed President Fisher, Atlanta Fed President Lockhart and Minneapolis Fed President Kocherlakota are scheduled to come across the wires. Although only Lockhart is currently on the rate-setting FOMC committee, Kocherlakota and Fisher were voting members last year and ought to be intimately familiar with the arguments in favor of and against additional easing. This means their remarks may prove market-moving in the absence of other catalysts.

The economic calendar is relatively quiet inEuropean hours, with SwissUnemployment and German CurrentAccount numbers amounting to the only bits ofhigh-profile event risk. The former reading is expected to see thejobless rate drop to 3.3 percent in March, but the nominal pullbackis unlikely to carry significant implications for SNB monetarypolicy, where the focus remains on fighting deflation, and so willprobably have at best a limited impact on the Swiss Franc .

Meanwhile, the most significant take-away fromthe latter outcome is likely to be the export growth gauge, whereexpectations call for a 1.2 percent decline. Nearly 39 percent ofGerman cross-border sales are accounted for by other Eurozonecountries, so weakness here may underscore the danger of economicslowdown in the periphery for the region’s core. While thismay emerge as a headwind for the Euro in due time, one data pointis unlikely to stir significant fireworks from the Euro . Broadly speaking, monthly German exportgrowth readings have been trending lower since mid-2010.

The Australian and NewZealand Dollars came under heavy selling pressure after ChineseTrade Balance figures unexpectedly showed a $5.35 billion surplusin March compared with expectations for a -$3.15 billion deficit.The result seemed to further dent PBOC stimulus expectationsalready on the wane after yesterday’s CPI result . The Japanese Yen rose after the Bank of Japan kept interest rates unchanged at 0.10 percentand held off on expanding its non-standard easing measures (assetpurchase fund, credit-loan program, bond purchases), erasingearlier losses. The bank added that the decision was unanimous andeven specified that none of its officials proposed expandingaccommodative policies.

Asia Session : What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

23:01

GBP

Lloyds Employment Confidence (MAR)

-58

-69

23:01

GBP

RICS House Price Balance (MAR)

-10%

-13%

-12%

23:30

AUD

AiG Performance of Construction Index (MAR)

36.2

35.6

1:30

AUD

NAB Business Conditions (MAR)

4

-

3

1:30

AUD

NAB Business Confidence (MAR)

3

-

1

1:30

AUD

ANZ Job Advertisements (MoM) (MAR)

1.0%

-

3.3%

3:03

CNY

Trade Balance ($) (MAR)

5.35B

-3.15B

-31.48B

3:03

CNY

Exports (YoY) (MAR)

8.9%

7.0%

18.4%

3:03

CNY

Imports (YoY) (MAR)

5.3%

9.0%

39.6%

3:09

JPY

Bank of Japan Rate Decision

0.10%

0.10%

0.10%

E uro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

5:45

CHF

Unemployment Rate (MAR)

3.3%

3.4%

Medium

5:45

CHF

Unemployment Rate s.a. (MAR)

3.1%

3.1%

Medium

6:00

EUR

German Exports s.a. (MoM) (FEB)

-1.2%

2.4%

Low

6:00

EUR

German Imports s.a. (MoM) (FEB)

1.3%

2.4%

Low

6:00

EUR

German Current Account (€) (FEB)

12.0B

8.0B

Medium

6:00

EUR

German Trade Balance (€) (FEB)

12.0B

13.1B

Medium

6:00

JPY

Machine Tool Orders (YoY) (MAR P)

-

-8.6%

Medium

6:30

AUD

Foreign Reserves (A$) (MAR)

-

49.1B

Low

6:45

EUR

French Industrial Production (MoM) (FEB)

0.3%

0.3%

Low

6:45

EUR

French Industrial Production (YoY) (FEB)

-1.4%

-1.5%

Low

6:45

EUR

French Manufacturing Production (MoM) (FEB)

0.0%

0.2%

Low

6:45

EUR

French Manufacturing Production (YoY) (FEB)

-1.7%

-1.2%

Low

8:30

GBP

DCLG UK House Prices (YoY) (FEB)

0.2%

Low

8:30

EUR

Euro-Zone Sentix Investor Confidence (APR)

-9.1

-8.2

Medium

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.3048

1.3192

GBPUSD

1.5847

1.6037

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya , e-mail ispivak@dailyfx.com . Follow Ilya on Twitter at @IlyaSpivak

To be added to Ilya 's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2012/04/10/Currency_Markets_to_Look_Past_European_Data_Focus_on_Fed_Chatter.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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