Euro To Look Past German Jobs Data To PMI Revisions, Pound At Risk

By Ilya Spivak, Currency Strategist

Talking Points
  • Euro Likely to Look Past German Unemployment Data, Focus on PMI Revisions
  • British Pound Selling May Continue on Construction PMI, Mortgage Approvals
  • US Dollar, Risk Appetite Outlook Hinges on ADP Report with QE3 Bets in Flux
  • Japanese Yen Sold as Asian Stocks Rise Following Surprisingly Strong US ISM

GermanUnemployment figures headline the calendar in Europeanhours, with expectations calling for the economy to add 10,000 jobsin April. The unemployment rate is expected to hold at 6.7 percent,a record low. On balance, the resilience of the German labor marketis nothing new and ought not to prove particularly market-movingfor the Euro, with traders paying closer attention to finalrevisions of April’s EurozoneManufacturing PMI numbers.

Early estimates showed the factory sector shrank at the fastest pace since June 2009, pointing to deepening recession. This may prove to weigh on the single currency via building ECB rate cut expectations ahead of this week’s policy meeting. Although no change in benchmark lending rates or the announcement of new LTRO efforts are expected this time around, signs of an increasingly aggressive slowdown will prime investors for dovish rhetoric from ECB President Mario Draghi.

Elsewhere on the docket, UK ConstructionPMI is expected to show the home-building industrygrew at the weakest rate in three months while MortgageApprovals hit the lowest since March 2011. With monetary policy expectations in focus , these outcomes may reinforce downwardpressure on the British Pound following yesterday’sdismal manufacturing PMI result .

Later in the session, the US ADP Employmentreport will enter the spotlight. The likelihood of a Fed QE3 program remains a driving theme for the US Dollar and risk appetite at large, meaning a softoutcome is likely to be taken as fodder for stimulus hopes andweigh on the greenback. Alternatively, a n upside surprise will probably produce the opposite result .

The Japanese Yen underperformed in overnight trade, sliding asmuch as 0.4 percent, as Asian stocks advanced and sapped demand forthe safe-haven currency. The MSCI Asia Pacific regional benchmarkequity index added 0.7 percent after a stronger-than-expected ISM Manufacturing print from the US improved the outlook for regionalexporters.

Asia Session : What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

23:50

JPY

Monetary Base (YoY) (APR)

-0.3%

-

-0.2%

1:00

NZD

ANZ Commodity Price (APR)

-4.5%

-

-1.7%

1:30

JPY

Labor Cash Earnings (YoY) (MAR)

1.3%

-

0.1% (R-)

2:30

CNY

HSBC Manufacturing PMI (APR)

49.3

-

48.3

E uro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

7:15

CHF

Retail Sales (Real) (YoY) (MAR)

1.1%

0.8%

Medium

7:30

CHF

PMI Manufacturing (APR)

51

51.1

Medium

7:45

EUR

Italian PMI Manufacturing (APR)

46.6

47.9

Low

7:50

EUR

French PMI Manufacturing (APR F)

47.3

47.3

Low

7:55

EUR

German Unemployment Change (APR)

-10K

-18K

High

7:55

EUR

German Unemployment Rate s.a. (APR)

6.7%

6.7%

Medium

7:55

EUR

German PMI Manufacturing (APR F)

46.3

46.3

Medium

8:00

EUR

Italian Unemployment Rate s.a. (MAR P)

9.4%

9.3%

Low

8:00

EUR

Euro-Zone PMI Manufacturing (APR F)

46.0

46.0

Medium

8:30

GBP

PMI Construction (APR)

54.0

56.7

Medium

8:30

GBP

Net Consumer Credit (MAR)

0.3B

0.4B

Low

8:30

GBP

Net Lending Sec. on Dwellings (MAR)

1.0B

1.2B

Low

8:30

GBP

Mortgage Approvals (MAR)

48.0K

49.0K

Medium

8:30

GBP

M4 Money Supply (MoM) (MAR)

-

-1.9%

Low

8:30

GBP

M4 Money Supply (YoY) (MAR)

-

-3.4%

Low

8:30

GBP

M4 Ex IOFCs 3M Annualised (MAR)

-

2.5%

Low

9:00

EUR

Euro-Zone Unemployment Rate (MAR)

10.9%

10.8%

Medium

9:00

EUR

Italian PPI (MoM) (MAR)

0.6%

0.4%

Low

9:00

EUR

Italian PPI (YoY) (MAR)

3.0%

3.2%

Low

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.3082

1.3279

GBPUSD

1.6097

1.6250

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

To contact Ilya , e-mail ispivak@dailyfx.com . Follow me 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/2012/05/02/Euro_to_Look_Past_German_Jobs_Data_to_PMI_Revisions_Pound_at_Risk.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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