Talking Points
- Euro: Germany Sees Precautionary Credit Line For Spain
- British Pound: BoE’s Tucker Raises U.K. Outlook, Policy Minutes On Horizon
Euro: Germany Sees Precautionary Credit Line For Spain
The Euro advanced to 1.3048 as Germany policy makers floated the idea of a precautionary credit line for Spain on top of the EUR 100B bank bailout, while European Central Bank board memberJosef Bonnici encouraged Spain to seek assistance before the government is ‘put to the test by the markets.’
Indeed, it seems as though the EU is increasing its efforts to address the debt crisis ahead of the summit on tap for later this week, but the meeting may do little to restore investor confidence as Greece continues to look for a two-year extension to meet its budget target. At the same time, we may see growing opposition for another debt restructuring in Greece as the region struggles to secure its next bailout payment, and the single currency is likely to face additional headwinds over the near-term as European policy makers fail to restore investor confidence.
As the EURUSD maintains the range-bounce price action from the beginning of the month, we may see the pair continue to consolidate ahead of the EU Summit, but we will maintain our bearish forecast for the pair as it appears to be making another failed run at the 38.2% Fibonacci retracement from the 2009 high to the 2010 low around 1.3120.
British Pound: U.K. Inflation Cools, BoE Minutes In Focus
The British Pound extended the advance from the previous week, with the GBPUSD climbing to a high of 1.6120, and the sterling may continue to retrace the decline from earlier this month as the Bank of England slowly moves away from its easing cycle.
Although the headline reading for U.K. inflation eased to 2.2% in September, the Bank of England Minutes on tap for Wednesday may sound more hawkish this time around as the central bank scales back its forecast for undershooting the 2% target for price growth. As the region appears to be emerging from the double-dip recession, the policy statement may strike an improved outlook for the region, and the fresh batch of central bank rhetoric may prop up the British Pound should the Monetary Policy Committee talk down speculation for more quantitative easing.
As the relative strength index continues to come off of support (43), the GBPUSD looks poised for another run at the 23.6% Fib from the 2009 low to high around 1.6200, but we will retain a bullish outlook for the pair amid the shift in the policy outlook.
FX Upcoming
Currency
|
GMT
|
EDT
|
Release
|
Expected
|
Prior
| |
CAD
|
12:30
|
8:30
|
International Securities Transactions (Canadian dollar) (AUG)
|
8.50B
|
6.67B
| |
CAD
|
12:30
|
8:30
|
Manufacturing Shipments (MoM) (AUG)
|
0.5%
|
-1.5%
| |
USD
|
12:30
|
8:30
|
Consumer Price Index (MoM) (SEP)
|
0.5%
|
0.6%
| |
USD
|
12:30
|
8:30
|
Consumer Price Index (YoY) (SEP)
|
1.8%
|
1.7%
| |
USD
|
12:30
|
8:30
|
Consumer Price Index Ex Food & Energy (MoM) (SEP)
|
0.2%
|
0.1%
| |
USD
|
12:30
|
8:30
|
Consumer Price Index Ex Food & Energy (YoY) (SEP)
|
2.0%
|
1.9%
| |
USD
|
12:30
|
8:30
|
Consumer Price Index n.s.a. (SEP)
|
231.370
|
230.379
| |
USD
|
12:30
|
8:30
|
Consumer Price Index Core Index s.a. (SEP)
|
230.244
| ||
USD
|
13:00
|
9:00
|
Net Long-term TIC Flows (AUG)
|
$67.0B
| ||
USD
|
13:00
|
9:00
|
Total Net TIC Flows (AUG)
|
$73.7B
| ||
USD
|
13:15
|
9:15
|
Industrial Production (SEP)
|
0.2%
|
-1.2%
| |
USD
|
13:15
|
9:15
|
Capacity Utilization (SEP)
|
78.3%
|
78.2%
| |
USD
|
13:15
|
9:15
|
Manufacturing Production (SIC) (SEP)
|
-0.7%
| ||
USD
|
14:00
|
10:00
|
NAHB Housing Market Index (OCT)
|
41
|
40
| |
USD
|
16:00
|
12:00
|
Fed's Sarah Bloom Raskin Speaks on Financial Regulation
| |||
USD
|
16:00
|
12:00
|
Fed's Dennis Lockhart Speaks on U.S. Economy
|
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