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DailyFX | February 24 2012 1:05 EST
The US Dollar may face continued selling pressure while the Euro gains amid firming risk appetite. Revised German GDP figures headline the data calendar.
Talking Points
The US Dollar (ticker: USDollar) was little changed against most of the major currencies overnight, with prices consolidating after the greenback suffered its largest drawdown in a month. The Japanese Yen broadly underperformed, sliding as much as 0.5 percent against its top counterparts. The move may have been driver by bargain-hunters after benchmark USDJPY exchange rate fell 0.4 percent over the preceding 24 hours, marking the largest daily loss in nearly four weeks. That move was likely linked to a drop in US Treasury yields – an important driver of Yen price action – after an auction of 7-year notes drew stronger-than-average demand. The Treasury sold $29 billion in debt with a bid-to-cover ratio of 3.11 compared with an average of 2.81 for the preceding ten auctions.
Looking ahead, the spotlight turns to the revised set of fourth-quarter German Gross Domestic Product figures. Expectations suggest the data will confirm the top economy in the Eurozone shrank 0.2 percent in the three months through December. Traders will be particularly interested in the component breakdown of the report to update their outlook for region. Eurozone economic data releases have broadly outperformed relative to expectations since mid-January, opening the door for upside surprises in today’s report.
Such an outcome is likely to prove supportive for the Euro, which has increasingly focused on the interest rates outlook after a second Greek bailout agreement was finally unveiled earlier this week. They may likewise offer a boost to overall risk sentiment (and stocks-correlated currencies) if the results prove strong-enough to downgrade Euro-area slowdown fears.Economists’ forecasts suggest the currency bloc will be the leading drag on global economic growth in 2012, with median forecasts pointing to a 0.5 percent contraction. Updated projections from the EU Commission released yesterday likewise foresaw recession, albeit a milder one where output fell 0.3 percent.
Asia Session: What Happened
GMT | CCY | EVENT | ACT | EXP | PREV |
23:50 | JPY | Corporate Service Price (YoY) (JAN) | -0.2% | 0.1% | 0.1% |
1:35 | CNY | MNI Business Condition Survey (FEB) | 58.87 | 58.16 | 55.95 |
2:00 | CNY | Conference Board Leading Index (JAN) | 225.7 | - | 222.1 |
Euro Session: What to Expect
GMT | CCY | EVENT | EXP | PREV | IMPACT |
7:00 | EUR | German GDP s.a. (QoQ) (4Q F) | -0.2% | -0.2% | High |
7:00 | EUR | German GDP n.s.a. (YoY) (4Q F) | 1.5% | 1.5% | High |
7:00 | EUR | German GDP w.d.a. (YoY) (4Q F) | 2.0% | 2.0% | High |
7:00 | EUR | German Domestic Demand (4Q) | - | 0.4% | Low |
7:00 | EUR | German Government Spending (4Q) | 0.0% | 0.6% | Low |
7:00 | EUR | German Construction Investment (4Q) | - | -0.7% | Low |
7:00 | EUR | German Imports (4Q) | -0.9% | 2.6% | Low |
7:00 | EUR | German Exports (4Q) | -1.4% | 2.5% | Low |
7:00 | EUR | German Capital Investment (4Q) | 0.5% | 0.9% | Low |
7:00 | EUR | German Private Consumption (4Q) | -0.1% | 0.8% | Low |
7:45 | EUR | French Consumer Confidence Indicator (FEB) | 82 | 81 | Low |
9:00 | EUR | Italian Retail Sales (MoM) (DEC) | -0.5% | -0.3% | Low |
9:00 | EUR | Italian Retail Sales (YoY) (DEC) | - | -1.8% | Low |
9:30 | GBP | GDP (QoQ) (4Q P) | -0.2% | -0.2% | High |
9:30 | GBP | GDP (YoY) (4Q P) | 0.8% | 0.8% | High |
9:30 | GBP | Private Consumption (4Q P) | 0.2% | 0.0% | Low |
9:30 | GBP | Gross Fixed Capital Formation (4Q P) | -0.9% | 1.3% | Low |
9:30 | GBP | Government Spending (4Q P) | 0.0% | 0.2% | Low |
9:30 | GBP | Exports (4Q P) | 1.5% | -0.8% | Low |
9:30 | GBP | Imports (4Q P) | 0.1% | 0.5% | Low |
9:30 | GBP | Total Business Investment (YoY) (4Q P) | 2.2% | 4.3% | Low |
9:30 | GBP | Total Business Investment (QoQ) (4Q P) | -0.7% | 0.3% | Low |
9:30 | GBP | Index of Services (MoM) (DEC) | 0.1% | 0.6% | Low |
9:30 | GBP | Index of Services (3Mo3M) (DEC) | 0.0% | 0.1% | Low |
Critical Levels
CCY | SUPPORT | RESISTANCE |
EURUSD | 1.3276 | 1.3424 |
GBPUSD | 1.5680 | 1.5778 |
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail ispivak@dailyfx.com. Follow him on Twitter at @IlyaSpivak
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