The EUR/JPY is trading lower at 123.274, down 0.200 or -0.16% as investors await the Euro Zone’s Final CPI y/y and Final Core CPI y/y reports. Final CPI
The EUR/JPY is trading lower at 123.274, down 0.200 or -0.16% as investors await the Euro Zone’s Final CPI y/y and Final Core CPI y/y reports. Final CPI is expected to come in at -0.2%. Final Core CPI is expected to show a reading of 0.7%. A lower-than-expected number should put pressure on the Euro.
Earlier in the session, the EUR/JPY had a mixed reaction to Japan’s gross domestic product report. Gross domestic product expanded a surprisingly strong 1.7% in the first quarter on an annualized basis from the quarter before. Beneath the surface, however, the performance doesn’t inspire confidence, which likely means additional stimulus should be expected.
The previous quarter’s growth was revised down the mirror opposite -1.7%, which makes the basis for comparison lower. Meantime, even though consumer-spending seemed strong, it was boosted by the extra day in February this year. Business capital spending plunged also.
The fresh GDP data confirms Japan’s on-again, off-again economy. For four quarters in a row, Japan’s economy has alternated between growth and contraction. Part of that is because Japan’s trend growth is so low, negative GDP is bound to happen. But it also signals a weak underlying economy. The end result is that output was the same last quarter as it was a year earlier.
The GDP report combined with stubbornly low inflation likely means further Bank of Japan easing seems equally in the cards. The GDP report also reflects numbers from a quarter that showed the Yen up 3%. This quarter, the Yen is up 10% so growth could be substantially lower with the weight of a stronger currency on exports. Therefore, it is easy to conclude that the Japanese government has to come back with additional stimulus.
Look for a rally if the CPI comes out flat or better-than-the estimate. A downside bias should develop if the Euro Zone CPI report shows inflation below expectations.
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Today’s economic releases:
Cur. | Event | Actual | Forecast | Previous |
USD | API Weekly Crude Oil Stock | -1.140M | -3.000M | 3.450M |
USD | API Weekly Cushing Crude Oil Stock | 0.508M | 1.460M | |
NZD | PPI Input (QoQ) (Q1) | -1.0% | 0.3% | -1.2% |
JPY | GDP (YoY) (Q1) | 1.7% | 0.2% | -1.7% |
JPY | GDP (QoQ) (Q1) | 0.4% | 0.1% | -0.4% |
NZD | RBNZ Gov Wheeler Speaks | |||
AUD | RBA Assist Gov Debelle Speaks | |||
AUD | Wage Price Index (QoQ) (Q1) | 0.4% | 0.5% | 0.5% |
GBP | Average Earnings Index +Bonus (Mar) | 2.0% | 1.7% | 1.8% |
GBP | Claimant Count Change (Apr) | -2.4% | 4.3K | 6.7K |
GBP | Unemployment Rate (Mar) | 5.1% | 5.1% | 5.1% |
EUR | Core CPI (YoY) (Apr) | 0.7% | 0.8% | |
EUR | CPI (MoM) (Apr) | 1.2% | ||
EUR | CPI (YoY) (Apr) | -0.2% | -0.2% | |
EUR | German 10-Year Bund Auction | 0.150% | ||
CAD | Foreign Securities Purchases (Mar) | 10.35B | 15.94B | |
USD | Crude Oil Inventories | -2.833M | -3.410M | |
USD | Cushing Crude Oil Inventories | 1.520M | ||
USD | FOMC Meeting Minutes | |||
AUD | Employment Change (Apr) | 12.5K | 26.1K | |
AUD | Full Employment Change (Apr) | -8.8K | ||
AUD | Unemployment Rate (Apr) | 5.8% | 5.7% |
Upcoming Economic Events that you should be monitoring:
Thursday, May 19, 2016
Cur. | Event | Actual | Forecast | Previous | |
GBP | Core Retail Sales (MoM) (Apr) | 0.6% | -1.6% | ||
GBP | Core Retail Sales (YoY) (Apr) | 1.9% | 1.8% | ||
GBP | Retail Sales (YoY) (Apr) | 2.5% | 2.7% | ||
GBP | Retail Sales (MoM) (Apr) | 0.5% | -1.3% | ||
EUR | ECB Publishes Account of Monetary Policy Meeting | ||||
USD | Initial Jobless Claims | 275K | 294K | ||
USD | Philadelphia Fed Manufacturing Index (May) | 3.5 | -1.6 | ||
USD | Philly Fed Employment (May) | -18.5 | |||
CAD | Wholesale Sales (MoM) (Mar) | -0.5% | -2.2% | ||
USD | FOMC Member Dudley Speaks |
Government Bond Auctions
Date Time Country Auction
May 18 11:30 Germany Eur 4bn Feb 2026 Bund
May 18 17:20 Sweden Announces details of bond auction on May 25
May 19 10:30 Spain Holds bond auction
May 19 11:03 Sweden Hold bond auction
May 19 11:50 France Holds bond auction
May 20 11:03 Sweden Sek 1.992bn 0.5% Jun 2017 I/L bond
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.