Forex Analysis: US Dollar, Yen Vulnerable on Risk Appetite Recovery

The US Dollar and Japanese Yen appear vulnerable as a corrective bounce in risk appetite is reinforced by expectations for an improvement in US consumer confidence.

Talking Points

• German CPI Unlikely to Stir Euro Volatility After ECB Rate Decision
• Dollar, Yen at Risk as S&P 500 Futures Point to Risk Appetite Recovery
• US Consume Confidence Gauge Set to Hit 62-Month High in November

The final revision of October's German CPI figures headlines a lackluster economic calendar in European hours. Expectations call for confirmation of initial estimates that put the annual inflation rate at 2 percent, unchanged from September. Barring a sharp revision to the downside, the outcome is unlikely to elicit a strong response from forex traders in the immediate aftermath of the yesterday's ECB rate decision, where central bank President Mario Draghi offered little in terms of concrete policy guidance. September's UK Trade Balance data is also on tap.

On the sentiment front, S&P 500 stock index futures are pointing sharply higher in late Asian hours, hinting at a risk-on mood into the end of the trading week. Such an outcome seems reasonable after two days of aggressive selling that pushed the benchmark stock index to the lowest in three months. Such an outcome may weigh on the safe-haven US Dollar and Japanese Yen against their major counterparts. A pickup in US consumer confidence may reinforce this dynamic. Expectations suggest a sentiment gauge from the University of Michigan rose to the highest level since September 2007 in November.

Asia Session: What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
20:00	NZD	REINZ Housing Price Index (MoM) (OCT)	1.5%	-	0.6%
20:00	NZD	REINZ Housing Price Index(OCT)	3495.1	-	3442.1
20:00	NZD	REINZ House Sales (YoY) (OCT)	32.6%	-	8.0%
21:45	NZD	NZ Card Spending - Retail (MoM) (OCT)	0.4%	0.3%	-0.6%
21:45	NZD	NZ Card Spending (MoM) (OCT)	0.4%	-	-0.6%
23:50	JPY	Japan Money Stock M3 (YoY) (OCT)	1.9%	2.0%	2.1% (R+)
23:50	JPY	Japan Money Stock M2+CD (YoY) (OCT)	2.3%	2.4%	2.4%
1:30	CNY	Producer Price Index (YoY) (OCT)	-2.8%	-2.7%	-3.6%
1:30	CNY	Consumer Price Index (YoY) (OCT)	1.7%	1.9%	1.9%
5:00	JPY	Consumer Confidence (OCT)	39.7	39.5	40.1
5:30	CNY	Industrial Production (YoY)	9.6%	9.4%	9.2%
5:30	CNY	Industrial Production YTD (YoY) (OCT)	10.0%	9.9%	10.0%
5:30	CNY	Retail Sales (YoY) (OCT)	14.5%	14.4%	14.2%
5:30	CNY	Retail Sales YTD (YoY) (OCT)	14.1%	14.1%	14.1%
5:30	CNY	Fixed Assets Inv Excl. Rural YTD (YoY) (OCT)	20.7%	20.6%	20.5%

Euro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
7:00	EUR	German CPI (MoM) (OCT F)	0.0%	0.0%	Medium
7:00	EUR	German CPI (YoY) (OCT F)	2.0%	2.0%	Medium
7:00	EUR	German CPI - EU Harmonised (MoM) (OCT F)	0.1%	0.1%	Medium
7:00	EUR	German CPI - EU Harmonised (YoY) (OCT F)	2.1%	2.1%	Medium
7:30	EUR	French Bank of France Business Sentiment (OCT)	90	92	Low
7:45	EUR	French Industrial Production (MoM) (SEP)	-1.0%	1.5%	Low
7:45	EUR	French Industrial Production (YoY) (SEP)	-0.1%	-0.9%	Low
7:45	EUR	French Survey of Industrial Investments	-	-	Low
7:45	EUR	French Central Govt. Balance (¬) (SEP)	-	-97.7B	Low
7:45	EUR	French Manufacturing Production (MoM) (SEP)	-1.3%	1.8%	Low
7:45	EUR	French Manufacturing Production (YoY) (SEP)	-0.1%	-0.4%	Low
9:00	EUR	Italian Industrial Production wda (YoY) (SEP)	-4.7%	-5.2%	Low
9:00	EUR	Italian Industrial Production nsa (YoY) (SEP)	-	-5.1%	Low
9:00	EUR	Italian Industrial Production sa (MoM) (SEP)	-1.6%	1.7%	Low
9:30	GBP	Visible Trade Balance (£) (SEP)	-8900	-9844	Medium
9:30	GBP	Trade Balance Non EU (£) (SEP)	-4600	-4972	Low
9:30	GBP	Total Trade Balance (£) (SEP)	-3200	-4169	Low

Critical Levels

CCY	SUPPORT	RESISTANCE
EURUSD	1.2716	1.2812
GBPUSD	1.5941	1.6048

--- 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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