Euro at Risk of Deeper Losses if German IFO Data Underperforms

DailyFX

The Euro may decline further if the German IFO business confidence gauge falls short of expectations, stoking ECB interest rate cut expectations.

Talking Points

  • Euro at Risk of Deeper Losses if German IFO Data Underperforms
  • NZ Dollar Gains on RBNZ Outlook, Yen Sold as Risk Appetite Firms

The German IFO Survey of business confidence headlines the economic calendar in European hours. Expectations call for the headline Business Climate gauge to edge narrowly lower in April. Eurozone news-flow has increasingly underperformed relative to consensus forecasts in the last two months however, hinting economists are underestimating the severity of recession in the region and opening the door for a downside surprise. Such an outcome threatens to weigh on the Euro, mirroring yesterday’s response to soft PMI data as traders build out ECB rate cut expectations at next week’s policy meeting.

The New Zealand Dollar outperformed in overnight trade after the RBNZ signaled it intends to keep the benchmark interest rate unchanged through the remainder of the year. The Australian Dollar briefly spiked lower after first-quarter CPI data fell short of expectations, putting the year-on-year inflation rate at 2.5 percent compared with 2.8 percent expected. The Japanese Yen underperformed as risk appetite firmed across Asian exchanges, boosting demand for carry trades funded in the perennially low-yielding currency.

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Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

21:00

NZD

Reserve Bank of New Zealand Rate Decision

2.50%

2.50%

2.50%

23:50

JPY

Corporate Service Price (YoY) (MAR)

-0.2%

-0.3%

0.0%

1:00

AUD

DEWR Internet Skilled Vacancies (MoM) (MAR)

0.1%

-

-0.5%

1:30

AUD

Consumer Prices Index (QoQ) (1Q)

0.4%

0.7%

0.2%

1:30

AUD

Consumer Prices Index (YoY) (1Q)

2.5%

2.8%

2.2%

1:30

AUD

CPI – Trimmed Mean (QoQ) (1Q)

0.3%

0.5%

0.6%

1:30

AUD

CPI – Trimmed Mean (YoY) (1Q)

2.2%

2.4%

2.3%

1:30

AUD

CPI – Weighted Median (QoQ) (1Q)

0.5%

0.5%

0.6%

1:30

AUD

CPI – Weighted Median (YoY) (1Q)

2.6%

2.4%

2.5%

Euro Session:

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

6:00

CHF

UBS Consumption Indicator (MAR)

1.25 (A)

1.24

Low

8:00

EUR

German IFO - Business Climate (APR)

106.2

106.7

Medium

8:00

EUR

German IFO - Current Assessment (APR)

109.5

109.9

Medium

8:00

EUR

German IFO - Expectations (APR)

103.0

103.6

Medium

8:00

EUR

Italian Retail Sales (MoM) (FEB)

-0.1%

-0.5%

Low

8:00

EUR

Italian Retail Sales (YoY) (FEB)

-

-3.0%

Low

8:30

GBP

BBA Loans for House Purchase (MAR)

31400

30506

Low

10:00

GBP

CBI Reported Sales (APR)

8

0

Low

Critical Levels:

CCY

SUPPORT

RESISTANCE

EURUSD

1.2951

1.3062

GBPUSD

1.5192

1.5293

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

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

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