The US Dollar rallied as markets positioned for the possibility that this week’s headline economic data will bolster the case for a cutback in the Fed’s QE efforts.
Talking Points
US Dollar Soars as Markets Position for “Taper On” News-flow Ahead
Yen Spikes Higher on GDP Miss, Promptly Reverses on Fed Speculation
The US Dollar is outperforming to start the trading week, rising as much as 0.4 percent on average against its leading counterparts. The move is tracking a drop in S&P 500 futures, hinting price action may reflect pre-positioning ahead of this week’s key US economic reports and their implications for the Fed’s decision to “taper” QE asset purchases at the September policy meeting.
News-flow out of the world’s top economy has continued to improve over recent weeks, with figures from Citigroup suggesting economic data outcomes are broadly outperforming expectations by the largest margin since December of last year. This opens the door for upside surprises as Retail Sales, CPI and UofM Consumer Confidence numbers cross the wires this week, which traders fear may reinforce the likelihood of a cutback in stimulus just around the corner.
Not surprisingly, this has translated into USD strength for amid waning dilution fears as well as a shift toward a more supportive yields profile in as the US central bank begins to scale back the downward pressure it is exerting on borrowing costs. The Australian Dollar and the Japanese Yen bore the brunt of the greenback’s advance, sliding as much as 0.7 percent each. The latter currency briefly rallied after a disappointing set of second-quarter GDP figures but the move proved short-lived.
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Asia Session:
GMT
CCY
EVENT
ACT
EXP
PREV
21:17
NZD
REINZ Housing Price Index (JUL)
3669.1
–
3685.8
21:17
NZD
REINZ House Price Index (MoM) (JUL)
-0.5%
–
0.0%
21:17
NZD
REINZ House Sales (YoY) (JUL)
14.7%
–
0.0%
22:45
NZD
Food Prices (MoM) (JUL)
0.5%
–
2.1%
23:50
JPY
GDP (QoQ) (2Q P)
0.6%
0.9%
0.9%
23:50
JPY
GDP Annualized (2Q P)
2.6%
3.6%
3.8%
23:50
JPY
Nominal GDP (QoQ) (2Q P)
0.7%
1.0%
0.6%
23:50
JPY
GDP Deflator (YoY) (2Q P)
-0.3%
-0.7%
-1.1%
23:50
JPY
GDP Consumer Spending (YoY) (2Q P)
0.8%
–
0.9%
23:50
JPY
GDP Business Spending (YoY) (2Q P)
-0.1%
0.6%
-0.3%
23:50
JPY
Domestic CGPI (MoM) (JUL)
0.5%
0.2%
0.1%
23:50
JPY
Domestic CGPI (YoY) (JUL)
2.2%
1.9%
1.2%
1:30
AUD
Credit Card Purchases (A$) (JUN)
20.3B
–
22.6B
1:30
AUD
Credit Card Balances (A$) (JUN)
49.9B
–
49.6B
4:00
JPY
Tokyo Condominium Sales (YoY) (JUL)
31.6%
–
22.0%
4:30
JPY
Industrial Production (MoM) (JUN F)
-3.1%
–
-3.30%
4:30
JPY
Industrial Production (YoY) (JUN F)
-4.6%
–
-4.8%
4:30
JPY
Capacity Utilization (MoM) (JUN F)
-2.3%
–
2.3%
6:00
JPY
Machine Tool Orders (JUL P)
-12.1%
–
-12.4%
Euro Session:
GMT
CCY
EVENT
EXP/ACT
PREV
IMPACT
7:15
CHF
Retail Sales (Real) (YoY) (JUN)
2.3% (A)
1.5%
Medium
Critical Levels:
CCY
SUPP 3
SUPP 2
SUPP 1
Pivot Point
RES 1
RES 2
RES 3
EURUSD
1.3239
1.3297
1.332
1.3355
1.3378
1.3413
1.3471
GBPUSD
1.5394
1.5456
1.5477
1.5518
1.5539
1.558
1.5642
— Written by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak
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Source: Daily fx
