The Euro is looking for further progress at a summit of EU finance ministers to extend its rally while the Aussie gains as the RBA downplays rate cut outlook.
Talking Points
- Euro Looks for Bank Regulation Deal at EU Summit to Extend Rebound
- Australian Dollar Gains as RBA Pours Cold Water on 2013 Rate Cut Bets
All eyes are on a meeting of EU finance ministers in European trading hours, where policymakers are due to focus on the issue of a single bank supervisor. Leaders of the common market agreed in June to set this as a precondition to allowing the EFSF/ESM bailout facilities to recapitalize regional banks directly without funneling funds through the governments of member states (which otherwise increases sovereign debt levels). Progress on this front is likely to be viewed favorably by the Euro as well as risk appetite at large, and vice versa.
The Australian Dollar outperformed in overnight trade, rising against all of its leading counterparts despite a decision to cut interest rates to 3 percent by the RBA. The reduction was widely expected, with data from Credit Suisse suggesting markets were pricing in the probability of a 25bps reduction at over 90 percent. This turned forex traders? attention away from the change in the lending rate itself and toward guidance for future policy. RBA Governor Glenn Stevens projected no urgency in continuing the easing cycle, saying the effects of past efforts are yet to be felt in the overall economy. This was perceived as denting the likelihood of further rate cuts in the near term, sending the Aussie higher.
Asia Session: What Happened
GMT | CCY | EVENT | ACT | EXP | PREV |
23:50 | JPY | Monetary Base (YoY) (NOV) | 5.0% | - | 10.8% |
0:00 | NZD | ANZ Commodity Price (NOV) | 1.0% | - | 1.4% |
0:01 | GBP | BRC Sales Like-For-Like (YoY) (NOV) | 0.4% | 0.9% | -0.1% |
0:30 | AUD | Building Approvals (MoM) (NOV) | -7.6% | -1.6% | 9.5% |
0:30 | AUD | Current Account Balance (A$) (3Q) | -14900M | -14550M | -12369M |
0:30 | AUD | Current Account Balance (3Q) | 0.1 | 0 | 0.3 |
0:30 | AUD | Building Approvals (YoY) (OCT) | 14.50% | 20.2% | 14.3% |
1:30 | JPY | Labor Cash Earnings (YoY) (OCT) | 0.2% | - | -0.5% |
3:30 | AUD | Reserve Bank of Australia Rate Decision | 3.00% | 3.00% | 3.25% |
Euro Session: What to Expect
GMT | CCY | EVENT | EXP/ACT | PREV | IMPACT |
8:00 | EUR | EU-27 Finance Ministers Meet in Brussels | - | - | High |
9:30 | GBP | PMI Construction (NOV) | 49.3 (A) | 50.9 | Medium |
10:00 | EUR | Euro-zone PPI (YoY) (OCT) | 2.6% (A) | 2.7% | Medium |
10:00 | EUR | Euro-zone PPI (MoM) (OCT) | 0.1% (A) | 0.2% | Medium |
Critical Levels
CCY | SUPPORT | RESISTANCE |
EURUSD | 1.2992 | 1.3137 |
GBPUSD | 1.6023 | 1.6184 |
? 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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