Talking Points:
FX Markets Treading Water in Europe as Traders Wait for US Jobs Data
Soft US News-flow vs. Expectations Opens the Door for Downside Surprise
Yen to Outperform as Aussie, Kiwi Dollars Sink on Soft Nonfarm Payrolls
Currency markets are in quiet consolidation mode in early European hours as traders await the release of January’s much-anticipated US Employment report. Expectations call for a 180,000 increase in Nonfarm Payrolls, marking an improvement from December’s disappointing 74,000 increase. The unemployment rate is expected to remain unchanged at 6.7 percent.
US economic news-flowhas increasingly disappointed relative to expectations over recent weeks, suggesting forecasters still underestimating the severity of the current soft patch in the US recovery. This may open the door for an underwhelming result this time around as well.
Meanwhile, the latest round of “Fed-speak” has seen policymakers staunchly supporting continued”tapering” of QE asset purchases. That suggests a soft result is likely to be interpreted in terms of its negative implications for growth rather than in terms of fueling hopes for a slowdown in policy normalization, which may fuel further risk aversion.
In the FX space, such a scenario stands to boost the safe-haven Japanese Yen. Sentiment-sensitive currencies like the Australian and New Zealand Dollars may find themselves taking the brunt of selling pressure as risk appetite fizzles.
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Asia Session
GMT
CCY
EVENT
ACT
EXP
PREV
22:30
AUD
AiG Performance of Construction Index (JAN)
48.2
–
50.8
23:50
JPY
Official Reserve Assets ($) (JAN)
1277.1B
–
1266.8B
0:30
AUD
RBA Statement on Monetary Policy
–
–
–
1:45
CNY
HSBC/Markit Services PMI (JAN)
50.7
–
50.9
5:00
JPY
Coincident Index (DEC P)
111.7
111.5
110.7
5:00
JPY
Leading Index (DEC P)
112.1
111.9
111.0
5:30
AUD
Foreign Reserves (A$) (JAN)
53.3B
–
59.5B
European Session
GMT
CCY
EVENT
EXP/ACT
PREV
IMPACT
7:00
EUR
German Trade Balance (€) (DEC)
14.2B (A)
19.1B
Medium
7:00
EUR
German Current Account (€)(DEC)
23.5B (A)
23.3B
Low
7:00
EUR
German Exports s.a. (MoM) (DEC)
-0.9% (A)
0.7%
Low
7:00
EUR
German Imports s.a. (MoM) (DEC)
-0.6% (A)
-2.3%
Low
8:00
CHF
Foreign Currency Reserves (JAN)
437.7B (A)
435.2B
Medium
8:15
CHF
Retail Sales (Real) (YoY) (DEC)
2.3% (A)
4.2%
Low
9:30
GBP
Total Trade Balance (£, mn) (DEC)
-1026 (A)
-3582
Low
9:30
GBP
Visible Trade Balance (£, mn) (DEC)
-7717 (A)
-9783
Low
9:30
GBP
Trade Balance Non EU (£, mn) (DEC)
-2198 (A)
-3048
Low
9:30
GBP
Industrial Production (MoM) (DEC)
0.4% (A)
-0.1%
Medium
9:30
GBP
Industrial Production (YoY) (DEC)
1.8% (A)
2.1%
Medium
9:30
GBP
Manufacturing Production (MoM) (DEC)
0.3% (A)
-0.1%
Medium
9:30
GBP
Manufacturing Production (YoY) (DEC)
1.5% (A)
2.2%
Medium
11:00
EUR
German Industrial Production (MoM) (DEC)
0.9%
1.9%
Medium
11:00
EUR
German Industrial Production (YoY) (DEC)
3.5%
3.5%
Medium
Critical Levels
CCY
Supp 3
Supp 2
Supp 1
Pivot Point
Res 1
Res 2
Res 3
EUR/USD
1.3294
1.3429
1.3510
1.3564
1.3645
1.3699
1.3834
GBP/USD
1.6163
1.6239
1.6280
1.6315
1.6356
1.6391
1.6467
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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Source: Daily fx