Talking Points:
- Euro May Extend Losses on a Downgrade of June’s German CPI Print
- British Pound Unlikely to Find Volatility in Construction Output Data
- Canadian Dollar Narrowly Outperformed in Quiet Asian Trading Hours
The final revision of June’s German CPI data headlines the economic calendar in European hours. The headline year-on-year inflation rate is expected to be confirmed at 1 percent, in line with flash estimates. In overall trend terms, German price-growth figures have tended to underperform relative to consensus forecasts since July 2013. That hints at the risk of a downside surprise, an outcome that – if realized – would likely weigh on the Euro amid swelling stimulus expansion bets. We are short EUR/USD.
Separately, May’s UK Construction Output figures are likely to pass with little fanfare. The year-on-year growth rate is expected to hit 5.6 percent, marking an advance from the 4.6 percent outcome recorded in the prior month. The BOE has argued it prefers to use macro-prudential tools rather than interest rate hikes to deal with the now worrisome effervescence of the UK property market, meaning an upbeat outcome is unlikely to spark policy tightening bets and thus offer little support to the British pound.
The major currencies were little-changed against the US Dollar in overnight trade as a lull in major event risk left markets in consolidation mode. The Canadian dollar narrowly outperformed but a discrete catalyst for the move was not readily apparently. On balance, the advance may have owed to little more than inertia, reflecting continuation of the advance initiated in yesterday’s North American session.
