S&P 500 Talking Points:
- British Pound may rise if firm UK PMI data boosts BOE rates outlook
- Fed-speak to inform investors’ interest rate hike timelineexpectations
- Aussie Dollar drops as RBA cuts rates, Yen gains and US Dollar falls
UK Manufacturing PMI data headlines the economic calendar in European trading hours. The report is expected to show sector activity growth accelerated for the second consecutive month in April. Recent UK economic news-flow has mounted a cautious recovery relative to consensus forecasts, cautiously hinting at scope for upside surprises. This may encourage the already-ongoing (albeit tepid) recovery in BOE rate hike bets, boosting the British Pound.
Later in the day, Fed-speak enters the spotlight as scheduled remarks from Loretta Mester, John Williams and Dennis Lockhart – Presidents of the Cleveland, San Francisco and Atlanta Fed branches respectively – due to cross the wires. Investors will comb through the comments in an attempt to decipher if the central bank’s move to de-emphasize risks from global headwinds in April’s policy statement was meant to telegraph a higher probability of hiking rates in June.
The Australian Dollar underperformed in overnight trade after the RBA cut the benchmark cash rate to a record low of 1.75 percent. Governor Glenn Stevens explicitly said the decision “follows information showing inflationary pressures are lower than expected,” suggesting stimulus expansion followed directly from last week’s disappointing first-quarter CPI data.
The Japanese Yen continued to push higher, with prices tracking S&P 500 futures lower to hint that eroding risk appetite stood behind gains in the anti-risk currency. The US Dollar traded broadly lower as front-end bond yields fell, pointing to continued erosion of Fed rate hike expectations. The move may follow on from disappointing Manufacturing ISM data yesterday. The report showed the pace of factory-sector activity growth slowed more than economists expected in April.
Losing money trading in the FX market? This might be why.
Asia Session
GMT | CCY | EVENT | ACT | EXP | PREV |
23:30 | AUD | Weekly Consumer Confidence Index (MAY 1) | 113.9 | - | 111.7 |
01:30 | AUD | Building Approvals (MoM) (MAR) | 3.7% | -2.0% | 2.9% |
01:30 | AUD | Building Approvals (YoY) (MAR) | -6.5% | -14.0% | -7.2% |
01:45 | CNY | Caixin China PMI Mfg (APR) | 49.4 | 49.8 | 49.7 |
04:30 | AUD | RBA Cash Rate Target (MAY 3) | 1.75% | 2.00% | 2.00% |
European Session
GMT | CCY | EVENT | EXP/ACT | PREV | IMPACT |
05:45 | CHF | SECO Consumer Confidence (APR) | -15 (A) | -14 | Low |
07:15 | EUR | ECB's Coeure Speaks in Paris | - | - | Low |
08:30 | GBP | Markit UK PMI Mfg SA (APR) | 51.2 | 51.0 | High |
09:00 | EUR | Eurozone PPI (MoM) (MAR) | 0.0% | -0.7% | Medium |
09:00 | EUR | Eurozone PPI (YoY) (MAR) | -4.3% | -4.2% | Medium |
09:00 | EUR | European Commission Economic Forecasts | - | - | Medium |
09:00 | EUR | ECB's Mersch Speaks at Meeting in Frankfurt | - | - | Low |
Critical Levels
CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
EUR/USD | 1.1290 | 1.1395 | 1.1465 | 1.1500 | 1.1570 | 1.1605 | 1.1710 |
GBP/USD | 1.4420 | 1.4535 | 1.4604 | 1.4650 | 1.4719 | 1.4765 | 1.4880 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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