Talking Points:
US Dollar May Fall as Japanese Yen Gains on Soft US Employment Figures
Aussie Dollar Edges Upward Alongside Australian Bond Yields Overnight
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All eyes are on February’s US Employment figures through the end of the trading week. Expectations point to a 235,000 increase in nonfarm payrolls, marking slight slowdown compared with the 257,000 increase recorded in January. US economic news-flow has increasingly deteriorated relative to consensus forecasts since late December, hinting analysts are overestimating the vigor of the economy. That opens the door for a downside surprise.
A disappointing result may pour cold water on Federal Reserve interest rate hike speculation, weighing on the US Dollar. It may likewise fuel risk aversion amid fears the US recovery will be insufficient to counterbalance headwinds to global growth from downturns in Europe and China. Souring sentiment is likely to be accompanied by carry trade liquidation, offering a lift to the Japanese Yen.
The Australian Dollar outperformed in otherwise quiet overnight trade, rising as much as 0.3 on average against its leading counterparts. The move tracked an advanced in Australia’s benchmark 10-year bond yield, pointing to moderating rate cut bets as a catalyst. Still, markets are pricing in 50 basis points of easing over the coming 12 months and a 48 percent probability of a cut next month.
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Asia Session
GMT
CCY
EVENT
ACT
EXP
PREV
22:30
AUD
AiG Perf of Construction (FEB)
43.9
–
45.9
23:50
JPY
Official Reserve Assets ($ ) (FEB)
1251.1B
–
1261.1B
5:00
JPY
Leading Index (JAN P)
105.1
105.8
105.3
5:00
JPY
Coincident Index (JAN P)
113.0
112.2
110.6
5:30
AUD
Foreign Reserves (A$) (FEB)
–
–
62.5B
European Session
GMT
CCY
EVENT
EXP
PREV
IMPACT
6:25
CHF
SNB FY Earnings
–
–
Low
7:00
EUR
Industrial Production (MoM) (JAN)
0.5%
0.1%
Low
7:00
EUR
Industrial Production (YoY) (JAN)
-0.2%
-0.7%
Low
8:00
CHF
Foreign Currency Reserves (FEB)
–
498.4B
Low
8:15
CHF
CPI (MoM) (FEB)
0.0%
-0.4%
Medium
8:15
CHF
CPI (YoY) (FEB)
-0.6%
-0.5%
Medium
8:15
CHF
CPI – EU Harmonized (MoM) (FEB)
0.0%
-0.4%
Low
8:15
CHF
CPI – EU Harmonized (YoY) (FEB)
0.0%
-0.1%
Low
9:30
GBP
BOE/GfK Inflation Next 12 Months (FEB)
–
2.5%
Low
10:00
EUR
GDP (QoQ) (4Q P)
0.3%
0.3%
Medium
10:00
EUR
GDP (YoY) (4Q P)
0.9%
0.9%
Medium
10:00
EUR
Gross Fixed Capital Formation (QoQ) (4Q)
0.3%
-0.3%
Low
10:00
EUR
Government Expenditure (QoQ) (4Q)
0.1%
0.3%
Low
Critical Levels
CCY
Supp 3
Supp 2
Supp 1
Pivot Point
Res 1
Res 2
Res 3
EURUSD
1.0792
1.0918
1.0974
1.1044
1.1100
1.1170
1.1296
GBPUSD
1.5132
1.5187
1.5213
1.5242
1.5268
1.5297
1.5352
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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Source: Daily fx