US Dollar May Correct Lower as Retail Sales Data Cools Fed Outlook

Talking Points:

Soft Retail Sales Data May Cool Fed Rate Hike Bets, Push US Dollar Lower
NZ Dollar Soars on RBNZ Rate Decision, Aussie Recovers on Jobs Report
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A quiet economic calendar in European trading hours is likely to see traders looking ahead to February’s US Retail Sales report. Consensus forecasts call for 0.3 percent increase, which would mark the strongest outcome in three months. Last week’s payrolls data notwithstanding however, US economic news-flow has tended to underperform relative to expectations since late December. This warns that analysts may be overestimating the economy’s vigor and opening the door for a downside surprise. Such an outcome may cool Fed rate hike speculation, weighing on the US Dollar.

The New Zealand Dollar outperformed in overnight after the RBNZ signaled it was in no hurry to cut interest rates at its monetary policy meeting. Governor Graeme Wheeler highlighted a range of factors underpinning strong economic growth and dismissed soft inflation readings in the near term as largely reflective of the transitory impact of oil prices. Speaking directly to the benchmark lending rate, Wheeler projected “a period of stability” ahead.

The Australian Dollar likewise advanced following a narrowly better-than-expected Employment report. The figures showed the economy added a net 15,600 jobs in February, narrowly topping economists’ expectations for 15,000 increase. The unemployment rate declined to 6.3 percent having hit a 13-year high at 6.4 percent in the prior month.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

20:00

NZD

RBNZ Interest Rate Decision

3.5%

3.5%

3.5%

21:45

NZD

Food Prices (MoM) (FEB)

-0.7%

1.3%

23:50

JPY

BSI Large All Industry (QoQ) (1Q)

1.9

6.0

5.0

23:50

JPY

BSI Large Manufacturing (QoQ) (1Q)

2.4

8.1

23:50

JPY

Tertiary Industry Index (MoM) (JAN)

1.4%

0.5%

0.0%

0:00

AUD

Consumer Inflation Expectation (MAR)

3.2%

4.0%

0:01

GBP

RICS House Price Balance (FEB)

14%

6%

7%

0:24

NZD

REINZ House Price Index (MoM) (FEB)

0.8%

-1.0%

0:24

NZD

REINZ House Sales (YoY) (FEB)

12.6%

2.6%

0:24

NZD

REINZ House Price Index (YoY) (FEB)

6.1%

7.5%

0:30

AUD

Employment Change (FEB)

15.6K

15.0K

-14.6K

0:30

AUD

Unemployment Rate (FEB)

6.3%

6.4%

6.4%

0:30

AUD

Full Time Employment Change (FEB)

10.3K

-30.9K

0:30

AUD

Part Time Employment Change (FEB)

5.3K

16.3K

0:30

AUD

Participation Rate (FEB)

64.6%

64.8%

64.7%

0:30

AUD

Credit Card Balances (JAN)

A$50.1B

A$51.3B

0:30

AUD

Credit Card Purchases (JAN)

A$21.5B

A$27.0B

2:00

JPY

Tokyo Avg Office Vacancies (FEB)

5.31

5.36

5:00

JPY

Consumer Confidence Index (FEB)

40.7

39.1

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

7:00

EUR

German CPI (MoM) (FEB F)

0.9%

0.9%

Medium

7:00

EUR

German CPI (YoY) (FEB F)

0.1%

0.1%

Medium

7:00

EUR

German CPI – EU Harmonised (MoM) (FEB F)

1.0%

1.0%

Low

7:00

EUR

German CPI – EU Harmonised (YoY) (FEB F)

-0.1%

-0.1%

Low

9:30

GBP

Trade Balance Non EU (£) (JAN)

-3400M

-3796M

Low

9:30

GBP

Total Trade Balance (£) (JAN)

-2300M

-2895M

Low

9:30

GBP

Visible Trade Balance (£) (JAN)

-9650M

-10154M

Low

10:00

EUR

Eurozone Industrial Production (MoM) (JAN)

0.2%

0.0%

Low

10:00

EUR

Eurozone Industrial Production (YoY) (JAN)

0.1%

-0.2%

Low

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EURUSD

1.0180

1.0386

1.0466

1.0592

1.0672

1.0798

1.1004

GBPUSD

1.4565

1.4769

1.4850

1.4973

1.5054

1.5177

1.5381

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

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