- German Retail Sales improve
- German Unemployment mixed
- Nikkei -1.05% Europe up 0.44%
- Oil at $88/bbl
- Gold $1565/oz.
- AUD Private Capital Expenditure 6.1% vs. 4.1%
- AUD Private Sector Credit (MoM) 0.4% vs. 0.3%
- AUD Building Approvals (MoM) -8.7% vs. 0.3%
- JPY Industrial Production (MoM) 0.2% vs. 0.6%
- NZD NBNZ Business Confidence 27.1 vs. 35.8
- CHF Gross Domestic Product (QoQ) 0.7% vs. 0.0%
- EUR German Unemployment Change 0K vs. -5k
- EUR German Retail Sales (MoM) 0.6% vs. 0.1%
Event Risk on Tap
- USD ADP Employment Change Expected at 135K
- USD Gross Domestic Product (Annualized) Expected at 1.9%
- USD Personal Consumption Expected at 2.9%
- USD Gross Domestic Product Price Index Expressed at 1.5%
- USD Core Personal Consumption Expenditure (QoQ) Expected at 2.1%
- USD Initial Jobless Claims Expected at 370K
- CAD Current Account (BoP) (Canadian dollar) Expected at -$10.8B
- USD/JPY below 79.00
- AUD/USD small recovery to .9740
- GBP/USD retakes 1.5500
- EUR/USD retakes 1.2400
Risk FX staged a mild rebound in early European trade as equities stabilized and short covering kicked in after several relentless days of selling. The euro recovered above the 1.2400 level while cable recaptured 1.5500 on a relatively uneventful night of trade marked by some mixed economic data from Germany.
German Retail Sales hit a 9 month high rising by 0.6% versus 0.1% eyed helping the euro to recover from its lows in early European opening trade. On a year over year basis however, retail Sales declined by -3.8%.
The details of the report showed that food, drink and tobacco sales were down by -5.9% while non-food sales declined by -2.2% suggesting that some of the spending may taking place on items not included in the report.
Meanwhile German unemployment missed its mark printing flat at 0K versus expectations of -5K reduction in rolls. The unemployment rate improved to 6.7% from 6.8% eyed. The data shows that labor demand continues to slow down in Europe’s largest economy as it fails to generate jobs for the second month in a row.
Mario Draghi made a speech to the European Parliament in which he suggested that a European Deposit Guarantee should protect depositors across the EU and help mitigate any bank runs. He also noted that ESM could potentially be used to recapitalize banks through a memorandum of understanding. His remarks offered little new information to the market and had little impact on trade.
Looking towards the North American open the focus will be squarely on the ADP data due at 13:15 GMT. The market is relatively bullish expecting a rise to 145K new jobs from 119K the period prior. However, we believe that higher gasoline prices may have had a lingering dampening effect on labor demand and the chance of a downside miss is relatively good. If the US eco data misses its mark it could trigger yet another wave of risk aversion unwinding much of recovery rally in Asia and Europe. However if the data surprises to the upside the short squeeze in risk FX could pick up momentum as all the pairs remain grossly oversold and are due for some much needed relief.
|USD||12:15||8:15||ADP Employment Change||135K||119K|
|USD||12:30||8:30||Gross Domestic Product (Annualized)||1.9%||2.2%|
|USD||12:30||8:30||USD Personal Consumption||2.9%||2.9%|
|USD||12:30||8:30||Gross Domestic Product Price Index||1.5%||1.5%|
|USD||12:30||8:30||Core Personal Consumption Expenditure (QoQ)||2.1%||2.1%|
|USD||12:30||8:30||Initial Jobless Claims||370K||370K|
|CAD||12:30||8:30||Current Account (BoP)||-$10.8B||-$10.3B|