Forex Analysis: Euro May Fall on German Jobs Data, Franc Eyes GDP Data

The Euro may fall as a soft German jobs report boosts ECB easing expectations while the Swiss Franc is vulnerable if third-quarter GDP data disappoints.

Talking Points

• Euro May Fall as Soft German Jobs Report Boosts ECB Rate Cut Bets

• Swiss GDP Disappointment May Weigh on Franc on Dovish SNB Outlook

• Japanese Yen Sold on “Fiscal Cliff” Deal Homes, Abe Easing Threats

German Unemployment data headline the economic calendar in European hours. Economists expect the economy lost 16,000 jobs in November. This marks a slight improvement following a 20,000 drop in the prior month but broadly reinforces the steep deterioration in labor-market conditions in the second half of the year. Forex traders may interpret the outcome to reinforce fears that the malaise in the periphery of the Eurozone is infecting core member states, bolstering ECB easing expectations and pushing the Euro lower.

Swiss Gross Domestic Product figures are likewise on tap, with expectations calling for output to rise 0.2 percent in the third quarter after falling 0.1 percent in the three months through June. A print matching forecasts falls broadly in line with the four-quarter trend average and may not offer much impetus for Swiss Franc volatility. By contrast, a disappointing result may amplify concerns about the impact of the Eurozone recession on Swiss cross-border trade and weigh on the Swiss Franc as investors position for the SNB to expand monetary stimulus (including measures directed specifically at weakening the currency).

The Japanese Yen underperformed in overnight trade, down against all of its major counterparts, as a rally in Asian stocks eroded demand for the safe-haven currency. The MSCI Asia Pacific regional benchmark index added 0.8 percent, taking cues from a late-day rally on Wall Street amid hopes the US will avoid the so-called “fiscal cliff” after House of Representatives Speaker John Boehner expressed confidence in hashing out a compromise. Dovish comments from Shinzo Abe, leader of Japan’s opposition LDP party and possibly the next Prime Minister, compounded downward pressure. Abe reiterated an intent to encourage the BOJ to provide unlimited monetary easing until a 2 percent inflation target is reached.

Asia Session: What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
23:50	JPY	Retail Trade s.a. (MoM) (OCT)	0.7%	1.0%	-3.5% (R+)
23:50	JPY	Retail Trade (YoY) (OCT)	-1.2%	-0.8%	0.4%
23:50	JPY	Large Retailers' Sales (OCT)	-3.2%	-2.2%	-1.00%
0:00	NZD	ANZ Activity Outlook (NOV)	31.6	-	25.5
0:00	NZD	NBNZ Business Confidence (NOV)	26.4	-	17.2
0:00	AUD	HIA New Home Sales (MoM) (OCT)	3.4%	-	-3.7%
0:30	AUD	Private Capital Expenditure (3Q)	2.8%	2.0%	3.4%
1:30	JPY	BOJ Board Member Shirai Speaks to Business Leaders	-	-	-

Euro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
6:45	CHF	Gross Domestic Product (QoQ) (3Q)	0.2%	-0.1%	High
6:45	CHF	Gross Domestic Product (YoY) (3Q)	0.9%	0.5%	High
7:00	GBP	Nationwide House Prices s.a. (MoM) (NOV)	0.1%	0.6%	Low
7:00	GBP	Nationwide House Prices n.s.a. (YoY) (NOV)	-1.0%	-0.9%	Low
8:55	EUR	German Unemployment Change (NOV)	16K	20K	High
8:55	EUR	German Unemployment Rate s.a. (NOV)	6.9%	6.9%	Medium
9:00	EUR	Italian Business Confidence (NOV)	88	87.6	Low
9:00	EUR	Italian Economic Sentiment (NOV)	-	76.6	Low
9:30	GBP	Net Lending Sec. on Dwellings (OCT)	0.6B	0.5B	Medium
9:30	GBP	Net Consumer Credit (OCT)	0.3B	1.2B	Low
9:30	GBP	Mortgage Approvals (OCT)	51.5K	50.0K	Low
9:30	GBP	M4 Money Supply (YoY) (OCT)	-	-3.5%	Low
9:30	GBP	M4 Money Supply (MoM) (OCT)	-	0.2%	Low
9:30	GBP	M4 ex IOFCs 3M Annualised (OCT)	-	7.4%	Low
10:00	EUR	Euro-Zone Business Climate Indicator(NOV)	-1.6	-1.62	Medium
10:00	EUR	Euro-Zone Economic Confidence (NOV)	84.5	84.5	Low
10:00	EUR	Euro-Zone Consumer Confidence (NOV F)	-26.9	-26.9	Medium
10:00	EUR	Euro-Zone Services Confidence (NOV)	-12.5	-12.1	Low
10:00	EUR	Euro-Zone Industrial Confidence (NOV)	-17.1	-18	Low
11:00	GBP	CBI Reported Sales (NOV)	18	30	Low

Critical Levels **

CCY	SUPPORT	RESISTANCE
EURUSD	1.2903	1.2978
GBPUSD	1.5975	1.6066

** Intraday support and resistance levels are derived from Pivot Points

--- 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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