Euro May Find Support in PMI Data, SNB Rate Decision on Tap
The Euro may find support as June’s flash PMI roundup argues against expanded ECB stimulus. The SNB rate decision is unlikely to offer policy innovation.
Talking Points
Euro May Rebound as PMIs Continue to Recover, Downgrading ECB Easing Bets
Swiss Franc Unlikely to Find Volatility in Status-Quo SNB Policy Announcement
NZ Dollar Lagged in Asia as Soft GDP Data Amplified Post-FOMC Risk Aversion
The preliminary set of June’s Eurozone PMI figures headlines the economic calendar in European trading hours. Expectations call for the composite gauge to edge higher for the third consecutive month, showing manufacturing- and service-sector activity shrank at the slowest pace since January. Such an outcome stands to underpin consensus forecasts suggesting that growth in the currency bloc is on the mend having bottomed in the first quarter. That may downgrade bets on a near-term expansion of ECB stimulus efforts, offering a lift to the Euro as prices continue to track the front-end yield spread.
The Swiss National Bank (SNB) is expected to maintain the target for its benchmark lending rate in the 0.0-0.25 percent range while the EURCHF floor remains at 1.20. The case for a status-quo outcome seems compelling. Indeed, the headline inflation rate has not accelerated deeper into negative territory and economic news-flow has improved relative to expectations since the central bank’s last sit-down in mid-March. The recent deterioration in European funding conditions has been mirrored in by a pullback in EURCHF however, suggesting Thomas Jordan and company are unlikely to let up on dovish rhetoric. On balance, that makes for a status-quo result that offers little in terms of lasting Swiss Franc volatility.
The US Dollar outperformed in overnight trade, rising against all of its top counterparts as Asian markets responded to yesterday’s FOMC monetary policy announcement. Fed Chairman Ben Bernanke said policymakers can conceivably begin to reduce the size of monthly asset purchases this year, with eye to discontinue them by mid-2014. The New Zealand Dollar bore the brunt of the selloff as general risk-aversion was compounded by a disappointment on the first-quarter GDP figure.
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Asia Session:
GMT | CCY | EVENT | ACT | EXP | PREV |
22:45 | NZD | Gross Domestic Product (QoQ) (1Q) | 0.3% | 0.5% | 1.5% |
22:45 | NZD | Gross Domestic Product (YoY) (1Q) | 2.4% | 2.5% | 3.2% |
1:30 | AUD | RBA Foreign Exchange Transaction (A$) (MAY) | 490M | - | 382M |
1:30 | AUD | RBA FX Transactions Govt. (MAY) | -515M | - | -624M |
1:30 | AUD | RBA FX Transactions Other (MAY) | 33M | - | 64M |
1:45 | CNY | HSBC Flash Manufacturing PMI (JUN) | 48.3 | 49.1 | 49.2 |
5:00 | JPY | Supermarket Sales (YoY) (MAY) | -1.2% | - | -1.9% |
5:00 | JPY | Coincident Index (APR F) | 95.3 | - | 94.8 |
5:00 | JPY | Leading Index (APR F) | 99.0 | - | 99.3 |
Euro Session:
GMT | CCY | EVENT | EXP/ACT | PREV | IMPACT |
6:00 | CHF | Trade Balance (CHF) (MAY) | 2.40B | 1.70B | Medium |
6:00 | CHF | Exports (MoM) (MAY) | - | -7.6% | Low |
6:00 | CHF | Imports (MoM) (MAY) | - | -0.9% | Low |
6:00 | EUR | German Producer Prices (MoM) (MAY) | -0.1% | -0.2% | Low |
6:00 | EUR | German Producer Prices (YoY) (MAY) | 0.3% | 0.1% | Low |
7:00 | EUR | French PMI Manufacturing (JUN P) | 47.0 | 46.4 | Low |
7:00 | EUR | French PMI Services (JUN P) | 44.8 | 44.3 | Low |
7:00 | JPY | Convenience Store Sales (YoY) (MAY) | - | -2.6% | Low |
7:30 | CHF | Swiss National Bank Rate Decision | 0.0% | 0.0% | High |
7:30 | CHF | Swiss National Bank EUR/CHF Floor | 1.20 | 1.20 | High |
7:30 | EUR | German PMI Manufacturing (JUN A) | 49.9 | 49.4 | High |
7:30 | EUR | German PMI Services (JUN A) | 50.0 | 49.7 | High |
8:00 | EUR | Euro-Zone PMI Manufacturing (JUN A) | 48.6 | 48.3 | High |
8:00 | EUR | Euro-Zone PMI Services (JUN A) | 47.5 | 47.2 | High |
8:00 | EUR | Euro-Zone PMI Composite (JUN A) | 48.1 | 47.7 | High |
8:30 | GBP | Retail Sales ex Auto Fuel (MoM) (MAY) | 1.0% | -1.4% | Medium |
8:30 | GBP | Retail Sales ex Auto Fuel (YoY) (MAY) | 0.5% | 0.2% | Medium |
8:30 | GBP | Retail Sales w/Auto Fuel (MoM) (MAY) | 0.8% | -1.3% | Low |
8:30 | GBP | Retail Sales w/Auto Fuel (YoY) (MAY) | 0.2% | 0.5% | Low |
10:00 | GBP | CBI Trends Total Orders (JUN) | -12 | -20 | Low |
10:00 | GBP | CBI Trends Selling Prices (JUN) | 4 | 4 | Low |
14:00 | EUR | Euro-Zone Consumer Confidence (JUN A) | -21.5 | -21.9 | Medium |
Critical Levels:
CCY | SUPPORT | RESISTANCE |
EURUSD | 1.3170 | 1.3387 |
GBPUSD | 1.5310 | 1.5624 |
--- 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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