Talking Points:
Aussie, Kiwi Dollars Rise on Swelling Risk Appetite and Chinese PMI Report
US Dollar May Fall if Second Day of Yellen Testimony Dents Rates Outlook
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The Australian and New Zealand Dollars outperformed in overnight trade, rising as much as 0.5 and 0.4 percent, as stocks advanced in Asian trade and drove demand for the sentiment-linked currencies. The MSCI Asia Pacific regional benchmark stock index rose 0.3 percent, following an ascent on Wall Street. The news-wires pinned the move as a response to testimony from Fed Chair Janet Yellen earlier in the day, suggesting investors took solace in the central bank chief’s view that baseline borrowing costs won’t rise for the next “couple of [FOMC] meetings”.
Upbeat Chinese economic data offered the Aussie and the Kiwi an added boost: the HSBC Manufacturing PMI gauge unexpectedly rose to 50.1 in February, showing factory sector activity grew for the first time in four months. China is Australia and New Zealand’s largest trading partner (aside from each other), so a pickup in performance there is often seen as boosting the two Oceanic countries’ growth prospects. That in turn limits the perceived scope for RBA and RBNZ rate cuts, driving the currencies upward.
The economic calendar is relatively quiet in European trading hours, with investors likely to look ahead toward another round of testimony from Chair Yellen for direction cues. Having spoken to members of the US Senate yesterday, she will now go through the same exercise with an analogous group of officials in the House of Representatives. While Yellen’s prepared remarks are likely to remain unchanged, investors will keenly monitor the Q&A portion of the outing for any new insights. Rhetoric fueling speculation about a protracted delay in starting to tighten monetary policy is likely to weigh on the US Dollar.
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Asia Session
GMT
CCY
EVENT
ACT
EXP
PREV
23:40
NZD
RBNZ’s Wheeler at Finance Select Committee
–
–
–
0:00
AUD
Skilled Vacancies (MoM) (JAN)
0.7%
–
0.4%
0:30
AUD
Construction Work Done (QoQ) (4Q)
-0.2%
-1.0%
-2.8%
0:30
AUD
Wage Cost Index (QoQ) (4Q)
0.6%
0.6%
0.6%
0:30
AUD
Wage Cost Index (YoY) (4Q)
2.5%
2.5%
2.6%
1:45
CNY
HSBC Manufacturing PMI (FEB P)
50.1
49.5
49.7
1:45
CNY
Westpac-MNI Consumer Sentiment (FEB)
112.0
–
112.1
European Session
GMT
CCY
EVENT
EXP
PREV
IMPACT
7:00
CHF
UBS Consumption Indicator (JAN)
–
1.42
Low
7:45
CHF
French Consumer Confidence (FEB)
91
90
Low
9:30
GBP
BBA Loans for House Purchase
36000
35667
Low
10:00
GBP
BOE’s Carney, Deputy Governors Speak
–
–
Medium
16:30
EUR
ECB’s Draghi Testifies to EU Parliament
–
–
Medium
Critical Levels
CCY
Supp 3
Supp 2
Supp 1
Pivot Point
Res 1
Res 2
Res 3
EURUSD
1.1191
1.1260
1.1300
1.1329
1.1369
1.1398
1.1467
GBPUSD
1.5299
1.5371
1.5413
1.5443
1.5485
1.5515
1.5587
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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Source: Daily fx