Talking Points:
- US Dollar seesaws upward amid pre-positioning for Yellen speech
- NZ Dollar down as disappointing trade data weighs on RBNZ bets
- Euro may not find lasting momentum in 2Q German GDP revision
The US Dollar corrected higher in overnight trade having traded broadly lower in the prior session. Seesaw price action since the beginning of the week seems to reflect pre-positioning ahead of a much-anticipated speech from Fed Chair Janet Yellen at the Jackson Hole Symposium on Friday.
A shift in priced-in policy bets implied in Fed Funds futures hints investors are leaning toward a hawkish outcome, hinting the greenback may find fuel for greater gains as the end of the week draws closer. The probability of a rate hike in December now stands at 53.9 percent compared 51 percent last week and 45.1 percent a month ago.
The New Zealand Dollar narrowly underperformed. The currency edged lower alongside front-end bond yields, hinting at a modest up-shift in RBNZ rate cut bets as the catalyst behind the decline. The move appeared to follow a disappointing Trade Balance report. The 12-month year-to-date deficit registered at –NZ$3.03 million versus –NZ$2.9 million expected.
Looking ahead, a revised set of second-quarter German GDP figures headlines an otherwise quiet European data docket. The release is expected to confirm the Eurozone’s largest economy added 0.4 percent in the three months through June. The figures will not capture the cooling effect of the “Brexit” referendum outcome and so seem unlikely to generate a lasting reaction from the Euro.
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Asia Session
GMT | CCY | EVENT | ACT | EXP | PREV |
22:45 | NZD | Trade Balance (JUL) | -433m | -325m | 110m |
22:45 | NZD | Exports (JUL) | 3.96b | 4.07b | 4.25b |
22:45 | NZD | Imports (JUL) | 4.40b | 4.45b | 4.14b |
22:45 | NZD | Trade Balance 12 Mth YTD (JUL) | -3034m | -2900m | -3331m |
01:00 | AUD | Skilled Vacancies MoM (JUL) | -0.6% | - | 0.8% |
01:30 | AUD | Construction Work Done (2Q) | -3.7% | -2.0% | -2.6% |
05:00 | JPY | Leading Index CI (JUN F) | - | - | 98.4 |
05:00 | JPY | Coincident Index (JUN F) | - | - | 110.5 |
European Session
GMT | CCY | EVENT | EXP | PREV | IMPACT |
06:00 | EUR | German Private Consumption (QoQ) (2Q) | 0.2% | 0.4% | Low |
06:00 | EUR | German Government Spending (QoQ) (2Q) | 0.5% | 0.5% | Low |
06:00 | EUR | German Capital Investment (QoQ) (2Q) | -1.3% | 1.8% | Low |
06:00 | EUR | German Construction Investment (QoQ) (2Q) | -2.8% | 2.3% | Low |
06:00 | EUR | German Domestic Demand (QoQ) (2Q) | -0.1% | 0.8% | Low |
06:00 | EUR | German Exports (QoQ) (2Q) | 0.7% | 1.0% | Low |
06:00 | EUR | German Imports (QoQ) (2Q) | -0.3% | 1.4% | Low |
06:00 | EUR | German GDP s.a. (QoQ) (2Q F) | 0.4% | 0.4% | Medium |
06:00 | EUR | German GDP w.d.a. (YoY) (2Q F) | 1.8% | 1.8% | Medium |
06:00 | EUR | German GDP n.s.a. (YoY) (2Q F) | 3.1% | 3.1% | Medium |
08:30 | GBP | BBA Loans for House Purchase (JUL) | 38000 | 40103 | Low |
Critical Levels
CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
EUR/USD | 1.1217 | 1.1269 | 1.1287 | 1.1321 | 1.1339 | 1.1373 | 1.1425 |
GBP/USD | 1.3015 | 1.3097 | 1.3148 | 1.3179 | 1.3230 | 1.3261 | 1.3343 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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