€€€ Euro to Look Past German Jobs Data to PMI Revisions, Pound at Risk

Euro Likely to Look Past German Unemployment Data, Focus on PMI Revisions British Pound Selling May Continue on Construction PMI, Mortgage Approvals US Dollar, Risk Appetite Outlook Hinges on ADP Report with QE3 Bets in stream Japanese Yen Sold as Asian Stocks Rise Following Surprisingly Strong US ISM German Unemployment figures headline the calendar in European hours, with expectations calling for the economy to add 10,000 jobs in April. The unemployment rate is expected to hold at 6.7 percent, a record low. On balance, the resilience of the German labor market is nothing new and ought not to prove particularly market-moving for the Euro, with traders paying closer attention to final revisions of April's Eurozone Manufacturing PMI numbers.
Early estimates showed the factory sector shrank at the fastest pace since June 2009, pointing to deepening recession. This may prove to weigh on the single currency through building ECB rate cut expectations ahead of this week's policy meeting. Although no. change in benchmark lending rates or the announcement of new LTRO efforts are expected this time around, signs of an increasingly aggressive slowdown will pay investors for dovish rhetoric from ECB President Mario Draghi.
Elsewhere on the docket, UK Construction PMI is expected to show the home-building industry grew at the weakest rate in three months while Mortgage Approvals hit the lowest since March 2011. With monetary policy expectations in focus, these outcomes may reinforce downward pressure on the British Pound following yesterday's dismal manufacturing PMI result.
Later in the session, the U.S. ADP Employment report will enter the spotlight. The likelihood of a Fed QE3 program remains a driving theme for the US Dollar and risk appetite at-large, meaning a soft outcome is likely to be taken as fodder for stimulus hopes and weigh on the greenback. Alternatively, an upside surprise will probably produce the opposite result.
The Japanese Yen underperformed in overnight trade, sliding as much as 0.4 percent, as Asian stocks advanced and sapped demand for the safe-haven currency. The MSCI Asia Pacific regional benchmark equity index added 0.7 percent after a stronger-than-expected ISM Manufacturing print from the US improved the outlook for regional exporters.
Asia Session: What Happened
Labor Cash Earnings (YoY) (MAR)
Euro Session: What to Expect
Retail Sales (Real) (YoY) (MAR)
Italian PMI Manufacturing (SAM)
French PMI Manufacturing (APR F)
German Unemployment Change (APR)
German Unemployment Rate s.a. (APR)
German PMI Manufacturing (APR F)
Italian Unemployment Rate s.a. (MAR P)
Euro-Zone PMI Manufacturing (APR F)
NET Lending dry. on Dwellings (MAR)
M4 Ex IOFCs 3 m Annualised (MAR)
Euro-Zone Unemployment Rate (MAR)
Critical Levels