Talking Points:
British Pound Outlook Clouded Before Augusts’ Services PMI Data Release
US Dollar Looks for Added Fuel in Factory Orders Report, Fed Beige Book
Aussie Dollar Corrects Higher, Yen Up as Japan PM Abe Reshuffles Cabinet
The Australian Dollar advanced in overnight trade, rising as much as 0.3 percent against its leading counterparts. The move appeared to reflect corrective price action after yesterday’s sharp decline rather than a discrete catalyst. Indeed, the release of Australian second-quarter GDP and Chinese PMI figures sparked a bit of volatility but offered little by way of directional conviction. The Yen likewise advanced after Prime Minister Shinzo Abe announced a re-shuffle of his cabinet. The announcement sent the benchmark Nikkei 225 stock index lower in afternoon trade, bolstering demand for the safe-haven Japanese unit.
Augusts’ UK Services PMI reading headlines the economic calendar in European hours. The index is expected to tick lower to 58.5 from an eight-month high at 59.1 recorded in the prior month. UK economic news-flow has increasingly improved relative to consensus forecasts in recent weeks, opening the door for an upside surprise. Such an outcome may boost BOE interest rate hike speculation, driving the British Pound higher.
It ought to be noted that Manufacturing and Construction PMI indexes produced mixed results earlier in the week however: Sterling advanced following a soft print on the former and tumbled following a strong outcome on the latter. Such counter-intuitive performance may have reflected thin trading conditions linked to the US markets being shuttered for the Labor Day holiday to start the week and liquidity’s subsequent return. In any case, attempting to construct a linear narrative on what may occur when today’s report is unveiled does not seem prudent.
Later in the day, the spotlight shifts back to US monetary policy considerations. July’s Factory Orders data is due to show an 11 percent surge, marking the largest monthly increase on record, while the Federal Reserve is set to release its Beige Book survey of regional economic conditions. The results may fuel continued US Dollar gains if the former outcome continues US data’s recent streak of outperformance while the latter reinforces growth acceleration bets, driving rate hike speculation.
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Asia Session
GMT
CCY
EVENT
ACT
EXP
PREV
22:45
NZD
Value of All Buildings s.a. (QoQ) (2Q)
1.0%
0.0%
15.0%
23:01
GBP
BRC Shop Price Index (YoY) (AUG)
-1.6%
-2.0%
-1.9%
23:30
AUD
AiG Performance of Service Index (AUG)
49.4
–
49.3
1:00
CNY
Non-manufacturing PMI (AUG)
54.4
–
54.2
1:30
AUD
Gross Domestic Product (YoY) (2Q)
3.1%
3.0%
3.4%
1:30
AUD
Gross Domestic Product (QoQ) (2Q)
0.5%
0.4%
1.1%
1:35
JPY
Markit Services PMI (AUG)
49.9
–
50.4
1:35
JPY
Markit/JMMA Composite PMI (AUG)
50.8
–
50.2
1:45
CNY
HSBC China Composite PMI (AUG)
52.8
–
51.6
1:45
CNY
HSBC China Services PMI (AUG)
54.1
–
50.0
European Session
GMT
CCY
EVENT
EXP
PREV
IMPACT
7:45
EUR
Markit/ADACI Italy Composite PMI (AUG)
–
53.1
Low
7:45
EUR
Markit/ADACI Italy Services PMI (AUG)
52.0
52.8
Low
7:50
EUR
Markit France Composite PMI (AUG F)
50.0
50.0
Low
7:50
EUR
Markit France Services PMI (AUG F)
51.1
51.1
Low
7:55
EUR
Markit Germany Services PMI (AUG F)
56.4
56.4
Medium
7:55
EUR
Markit/BME Germany Composite PMI (AUG F)
54.9
54.9
Medium
8:00
EUR
Markit Eurozone Services PMI (AUG F)
53.5
53.5
Medium
8:00
EUR
Markit Eurozone Composite PMI (AUG F)
52.8
52.8
Medium
8:30
GBP
Markit/CIPS UK Composite PMI (AUG)
–
58.8
Medium
8:30
GBP
Markit/CIPS UK Services PMI (AUG)
58.5
59.1
Medium
8:30
GBP
Official Reserves (Changes) (AUG)
–
-$616M
Low
9:00
EUR
Euro-Zone Retail Sales (MoM) (JUL)
-0.3%
0.4%
Medium
9:00
EUR
Euro-Zone Retail Sales (YoY) (JUL)
0.9%
2.4%
Medium
Critical Levels
CCY
Supp 3
Supp 2
Supp 1
Pivot Point
Res 1
Res 2
Res 3
EURUSD
1.3073
1.3100
1.3117
1.3127
1.3144
1.3154
1.3181
GBPUSD
1.6224
1.6371
1.6420
1.6518
1.6567
1.6665
1.6812
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
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