Pound May Fall on UK GDP, Euro Engulfed in Greece Crisis Fallout
DailyFX.com -
Talking Points:
Greece Set to Miss IMF Repayment with As-Yet Unknown Euro Implications
Pound May Decline if 1Q UK GDP Revision Weighs on BOE Rate Hike Bets
See Economic Releases Directly on Your Charts with the DailyFX News App
The revised set of first-quarter UK GDP figures headlines the economic calendar in European hours. The baseline outlook calls for a slight upgrade showing output expanded 0.4 percent versus the 0.3 percent gain initially reported. UK news-flow has tended to underperform relative to consensus forecasts recently, opening the door for a downside surprise. Such an outcome may push back BOE rate hike expectations, weighing on the British Pound.
The preliminary set of June’s Eurozone CPI figures is likewise on tap. The core year-on-year inflation rate is expected to edge lower to 0.8 percent after hitting a nine-month high at 0.9 percent in the prior month. The outcome seems unlikely to trigger a significant response from the Euro considering its limited implications for near-term ECB policy trends. Indeed, the central bank seems to be on auto-pilot as policymakers continue to implement the €60 billion/month QE effort launched earlier this year.
Furthermore, Greece remains in focus as the markets continue to digest the breakdown in negotiations between Athens and its creditors over the weekend. While a national referendum on the compromise offered by the so-called “institutions” represents the next pivotal inflection point, the country is due to return €1.6 billion to the IMF today. While Greek Prime Minister Alexis Tsipras has already said the payment will not be made, the fund’s response on the implications of doing so have been unclear.
On balance, Christine Lagarde and company will probably want to avoid being the hand that forces the issue and opt to wait for the referendum’s outcome. Still, headline risks remain substantial and sharp volatility may break out. The ECB’s response may prove at least as important as that of the IMF itself. If the central bank judges Athens has defaulted, it will have to decide whether it will cut off emergency financing support for Greek banks. The central bank likely has little interest in shaping political realities, but keeping an eye on news-flow remains a priority.
The New Zealand Dollar underperformed in overnight trade as disappointing economic data drove fueled RBNZ interest rate cut expectations. The ANZ Business Confidence dropped to -2.3 in June, the lowest since March 2011. The Japanese Yen strengthened as risk aversion fueled safe-haven demand and encouraged unwinding of carry traders funded in terms of the perennially low-yielding currency.
New to FX? START HERE!
Asia Session
GMT | CCY | EVENT | ACT | EXP | PREV |
22:45 | NZD | Building Permits (MoM) (MAY) | 0.0% | - | -0.9% |
23:05 | GBP | GfK Consumer Confidence (JUN) | 7 | 2 | 1 |
23:30 | AUD | Weekly Consumer Confidence Index (JUN 28) | 116.3 | - | 114 |
01:00 | AUD | HIA New Home Sales (MoM) (MAY) | -2.3% | - | 0.6% |
01:00 | NZD | ANZ Activity Outlook (JUN) | 23.6 | - | 32.6 |
01:00 | NZD | ANZ Business Confidence (JUN) | -2.3 | - | 15.7 |
01:30 | JPY | Labor Cash Earnings (YoY) (MAY) | 0.6% | 0.7% | 0.7% |
01:30 | JPY | Real Cash Earnings (YoY) (MAY) | -0.1% | 0.2% | -0.1% |
01:30 | AUD | Private Sector Credit (MoM) (MAY) | 0.5% | 0.5% | 0.3% |
01:30 | AUD | Private Sector Credit (YoY) (MAY) | 6.2% | 6.1% | 6.1% |
03:00 | NZD | Money Supply M3 (YoY) (MAY) | 8.1% | - | 7.7% |
04:00 | JPY | Vehicle Production (YoY) (MAY) | -16.6% | - | -7.5% |
05:00 | JPY | Housing Starts (YoY) (MAY) | 5.8% | 5.5% | 0.4% |
05:00 | JPY | Annualized Housing Starts (MAY) | 0.912M | 0.915M | 0.913M |
05:00 | JPY | Construction Orders (YoY) (MAY) | -7.4% | - | -12.1% |
European Session
GMT | CCY | EVENT | EXP/ACT | PREV | IMPACT |
06:00 | EUR | German Retail Sales (MoM) (MAY) | 0.5% (A) | 1.3% | Medium |
06:00 | EUR | German Retail Sales (YoY) (MAY) | -0.4% (A) | 1.1% | Medium |
07:00 | CHF | KOF Leading Indicator (JUN) | 93.7 | 93.1 | Low |
07:55 | EUR | German Unemployment Change (JUN) | -5K | -6K | Medium |
07:55 | EUR | German Unemployment Rate (JUN) | 6.4% | 6.4% | Medium |
08:00 | EUR | Italian Unemployment Rate (MAY P) | 12.3% | 12.4% | Low |
08:30 | GBP | Current Account Balance (1Q) | -24.0B | -25.3B | Low |
08:30 | GBP | GDP (QoQ) (1Q F) | 0.4% | 0.3% | High |
08:30 | GBP | GDP (YoY) (1Q F) | 2.5% | 2.4% | High |
08:30 | GBP | Total Business Investment (QoQ) (1Q F) | - | 1.7% | Low |
08:30 | GBP | Total Business Investment (YoY) (1Q F) | - | 3.7% | Low |
08:30 | GBP | Index of Services (MoM) (APR) | 0.3% | 0.1% | Low |
08:30 | GBP | Index of Services (3M/3M) (APR) | 0.5% | 0.4% | Low |
08:30 | GBP | Lloyds Business Barometer (JUN) | - | 55 | Low |
09:00 | EUR | Eurozone Unemployment Rate (MAY) | 11.0% | 11.1% | Medium |
09:00 | EUR | Eurozone CPI Estimate (YoY) (JUN) | 0.2% | 0.3% | High |
09:00 | EUR | Eurozone CPI Core (YoY) (JUN A) | 0.8% | 0.9% | High |
Critical Levels
CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
EURUSD | 1.0510 | 1.0833 | 1.1035 | 1.1156 | 1.1358 | 1.1479 | 1.1802 |
GBPUSD | 1.5480 | 1.5605 | 1.5671 | 1.5730 | 1.5796 | 1.5855 | 1.5980 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To receive Ilya's analysis directly via email, please SIGN UP HERE
Contact and follow Ilya on Twitter: @IlyaSpivak
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.