NIKKEI 225 Talking Points:
- Australian Dollar drops after 7-year government bond auction results
- Euro may decline if 2Q German GDP figures stoke ECB easing bets
- US retail sales, consumer confidence data may drive Fed speculation
The Australian Dollar underperformed in overnight trade, falling after the results of a 7-year government bond auction crossed the wires. The bid-to-cover ratio registered at 2.39 and the average yield posted at 1.71 percent, down from 3.00 and 1.73 percent recorded the last time analogous paper was sold in late July.
The results point to reduced demand and weaker rate expectations, which may imply bets on further RBA easing ahead. Indeed, front-end borrowing costs fell alongside the currency. Traders are currently pricing in at least one more 25bps reduction in the cash rate over the coming 12 months. The Yen weakened as Japan’s benchmark Nikkei 225 index advanced, eroding demand for the anti-risk currency.
Looking ahead, second-quarter German GDP figures enter the spotlight. Output is expected to add 0.2 percent, marking the smallest gain since the third quarter of 2014. A soft result may weigh on risk appetite, punishing sentiment-geared currencies including the Aussie. It may also fuel ECB stimulus expansion bets, sending the Euro downward.
Later in the day, the spotlight turns to July’s US Retail Sales report and Augusts’ preliminary University of Michigan consumer confidence reading. Receipts growth is expected to slow (0.4 percent vs. 0.6 percent prior) while sentiment firms (91.5 vs. 90.0 prior). It will be curious to see if the results create momentum in the priced-in Fed rate hike outlook, where indecision has prevailed for the past three weeks.
What do retail traders’ buying and selling decisions say about FX price trends? Find out here!
Asia Session
GMT | CCY | EVENT | ACT | EXP | PREV |
22:30 | NZD | BusinessNZ Manufacturing PMI (JUL) | 55.8 | - | 57.6 |
22:45 | NZD | Retail Sales Ex Inflation (QoQ) (2Q) | 2.3% | 1.0% | 1.0% |
01:30 | AUD | Credit Card Purchases (AU$) (JUN) | 25.5b | - | 26.0b |
01:30 | AUD | Credit Card Balances (AU$) (JUN) | 52.2b | - | 51.9b |
02:00 | CNY | Industrial Production (YoY) (JUL) | 6.0% | 6.2% | 6.2% |
02:00 | CNY | Industrial Production YTD (YoY) (JUL) | 6.0% | 6.0% | 6.0% |
02:00 | CNY | Retail Sales (YoY) (JUL) | 10.2% | 10.5% | 10.6% |
02:00 | CNY | Retail Sales YTD (YoY) (JUL) | 10.3% | 10.3% | 10.3% |
02:00 | CNY | Fixed Assets Ex Rural YTD (YoY) (JUL) | 8.1% | 8.9% | 9.0% |
European Session
GMT | CCY | EVENT | EXP | PREV | IMPACT |
06:00 | EUR | German Wholesale Price Index (MoM) (JUL) | - | 0.6% | Low |
06:00 | EUR | German Wholesale Price Index (YoY) (JUL) | - | -1.5% | Low |
06:00 | EUR | German CPI (MoM) (JUL F) | 0.3% | 0.3% | Medium |
06:00 | EUR | German CPI (YoY) (JUL F) | 0.4% | 0.4% | Medium |
06:00 | EUR | German GDP SA (QoQ) (2Q P) | 0.2% | 0.7% | High |
06:00 | EUR | German GDP WDA (YoY) (2Q P) | 1.4% | 1.6% | High |
06:00 | EUR | German GDP NSA (YoY) (2Q P) | 2.8% | 1.3% | High |
08:00 | EUR | Italian GDP (QoQ) (2Q P) | 0.2% | 0.3% | Medium |
08:00 | EUR | Italian GDP (YoY) (2Q P) | 0.8% | 1.0% | Medium |
08:30 | GBP | Construction Output (MoM) (JUN) | -1.0% | -2.1% | Low |
08:30 | GBP | Construction Output (YoY) (JUN) | -2.1% | -1.9% | Low |
09:00 | EUR | Eurozone Industrial Production (MoM) (JUN) | 0.5% | -1.2% | Low |
09:00 | EUR | Eurozone Industrial Production (YoY) (JUN) | 0.7% | 0.5% | Low |
09:00 | EUR | Eurozone GDP (QoQ) (2Q P) | 0.3% | 0.3% | High |
09:00 | EUR | Eurozone GDP (YoY) (2Q P) | 1.6% | 1.6% | High |
Critical Levels
CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
EUR/USD | 1.1043 | 1.1099 | 1.1118 | 1.1155 | 1.1174 | 1.1211 | 1.1267 |
GBP/USD | 1.2789 | 1.2881 | 1.2919 | 1.2973 | 1.3011 | 1.3065 | 1.3157 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To receive Ilya's analysis directly via email, please SIGN UP HERE
Contact and follow Ilya on Twitter: @IlyaSpivak
original source
