28 Apr 2014
EUR/USD: European inflation numbers may provide interim focus
FXStreet (London) - The dollar remains subdued ahead of key data due later in the week. With another quiet start to the week, markets are instead focused on Wednesday’s US first quarter gross domestic product numbers as well as Friday’s non-farm payroll employment statistics.
Potential for smaller-than-expected US GDP declines
Expectations are for US GDP to have slowed to 1.1 percent in the first quarter, down from 2.6 percent in the last quarter of 2013 and the lowest rate of growth in a year, although given more promising recent data, we may see some upside on expectations.
The Federal Open Market Committee will also conclude it’s two-day meeting on Wednesday, but it is expected to be a bland affair with the Fed carrying on with its programme or winding down its asset purchases in USD-10bn-a-month increments, with no change in forecasts. Although Yellen is not expected to face the press after the meeting, she will be speaking on Thursday.
Bullish NFP expectations
Expectations for Friday’s non-farm payroll numbers are bullish, with expectations of a 205k print and the headline unemployment rate falling to 6.6 percent. As we say last month, with such strong bullish forecasts, anything less than consensus busting will likely trigger dollar selling.
European inflation numbers may give some interim focus
Although US data risks lie to the upside, EUR/USD may see some support running into the US data with expectations of stronger prelim German and Eurozone composite inflation numbers. Weak Eurozone prices have been a big driving force behind speculation that the ECB will roll out QE-type measures, and any inflation upside will help to support EUR strength. In data to be released tomorrow, harmonised German index of consumer prices-measured inflation is expected to come in at 1.3 percent year-on-year in April, up on the 0.9 percent reading seen last month, while consumer price index inflation is expected to strengthen to 1.4 percent from 1 percent last month. Wednesday’s Eurozone composite is expected to show a rise to a still-weak 0.8 percent year-on-year rise in consumer price index prices, from 0.5 percent last month.
EUR/USD remains up 0.22 percent on the session at USD1.3872 from an opening of USD1.3839 after an earlier EUR serge on European M&A activity.
Potential for smaller-than-expected US GDP declines
Expectations are for US GDP to have slowed to 1.1 percent in the first quarter, down from 2.6 percent in the last quarter of 2013 and the lowest rate of growth in a year, although given more promising recent data, we may see some upside on expectations.
The Federal Open Market Committee will also conclude it’s two-day meeting on Wednesday, but it is expected to be a bland affair with the Fed carrying on with its programme or winding down its asset purchases in USD-10bn-a-month increments, with no change in forecasts. Although Yellen is not expected to face the press after the meeting, she will be speaking on Thursday.
Bullish NFP expectations
Expectations for Friday’s non-farm payroll numbers are bullish, with expectations of a 205k print and the headline unemployment rate falling to 6.6 percent. As we say last month, with such strong bullish forecasts, anything less than consensus busting will likely trigger dollar selling.
European inflation numbers may give some interim focus
Although US data risks lie to the upside, EUR/USD may see some support running into the US data with expectations of stronger prelim German and Eurozone composite inflation numbers. Weak Eurozone prices have been a big driving force behind speculation that the ECB will roll out QE-type measures, and any inflation upside will help to support EUR strength. In data to be released tomorrow, harmonised German index of consumer prices-measured inflation is expected to come in at 1.3 percent year-on-year in April, up on the 0.9 percent reading seen last month, while consumer price index inflation is expected to strengthen to 1.4 percent from 1 percent last month. Wednesday’s Eurozone composite is expected to show a rise to a still-weak 0.8 percent year-on-year rise in consumer price index prices, from 0.5 percent last month.
EUR/USD remains up 0.22 percent on the session at USD1.3872 from an opening of USD1.3839 after an earlier EUR serge on European M&A activity.