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FOREX: Traders to Look Past European Calendar, Focus on ADP Data

By , Currency Strategist
03 August 2011 06:05 GMT

Talking Points

  • US ADP Jobs Report in Focus as Global Slowdown Fears Continue
  • UK Service Sector Growth, Euro Zone Retail Sales to Show Weakness
  • Swiss Franc Pulls Back on Profit-Taking After Hitting Record High
  • Aussie, NZ Dollars Sold as Asian Stocks Follow Wall Street Lower

The economic European economic calendar doesn’t offer much by way of market-moving event risk and risk sentiment trends appear indecisive, with S&P 500 stock index futures little changed in overnight trade. This put the spotlight on the US ADP Employment report as the next major inflection point with markets still fixated on the deteriorating global growth outlook ahead of Friday’s all-important official jobs report from the Department of Labor. The ISM Non-Manufacturing gauge and the Factory Orders reading are also set to cross the wires.

Scanning the European data docket, the UK Services PMI reading is expected to show the non-manufacturing sector grew at the slowest pace in nine months while Euro Zone Retail Sales are set to fall for the second consecutive month, down 1 percent in the year to June. Portugal will also tap the markets to auction off up to 750 million euro in 105-day bills, which may feed into renewed debt crisis fears if borrowing costs register particularly high, but the short maturity of the securities on offer is likely to keep the markets’ response relatively muted.

The Swiss Franc underperformed in overnight trade, down as much as 0.8 percent. The move seems to have been driven by profit-taking after the currency posted the largest daily rally since January 1975 and hit a record high against its leading counterparts, stoked by safe-haven demand amid global economic slowdown fears and a re-escalation in Euro Zone sovereign risk.

The Australian and New Zealand Dollars remained under pressure in overnight trade as Asian stock exchanges followed Wall Street lower, dragging the sentiment-sensitive currencies downward. The MSCI Asia Pacific regional equities index fell 2.2 percent. Aussie sellers were further encouraged as the Trade Balance surplus narrowed more than forecast as exports fell for the first time in four months while Retail Sales posted an unexpected decline, sliding 0.1 percent.

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

23:01

GBP

BRC Shop Price Index (YoY) (JUL)

2.8%

-

2.9%

23:30

AUD

AiG Performance of Service Index (JUL)

48.8

-

48.5

1:00

CNY

China Non-manufacturing PMI (JUL)

59.6

-

57

1:30

AUD

Trade Balance (A$) (JUN)

2052M

2200M

2699M (R+)

1:30

AUD

Retail Sales Ex Inflation (QoQ) (Q2)

0.3%

0.4%

0.2% (R+)

1:30

AUD

Retail Sales s.a. (MoM) (JUN)

-0.1%

0.4%

-0.6%

2:30

CNY

China HSBC Services PMI (JUL)

53.5

-

54.1

Euro Session: What to Expect

GMT

CCY

EXP

PREV

IMPACT

6:00

CHF

UBS Real Estate Bubble Index (Q2)

-

0.63

Low

6:30

AUD

Foreign Reserves (AUD) (JUL)

-

$41.1B

Low

7:15

EUR

French PMI Services (JUL F)

54.2

54.2

Low

7:45

EUR

Italian PMI Services (JUL)

47.0

47.4

Low

7:55

EUR

German PMI Services (JUL F)

52.9

52.9

Medium

8:00

EUR

Euro-Zone PMI Composite (JUL F)

50.8

50.8

Medium

8:00

EUR

Euro-Zone PMI Services (JUL F)

51.4

51.4

Medium

8:30

GBP

PMI Services (JUL)

53.2

53.9

Medium

8:30

GBP

Official Reserves (Changes) (JUL)

-

-$148M

Low

9:00

EUR

Euro-Zone Retail Sales (MoM) (JUN)

0.5%

-1.3%

Medium

9:00

EUR

Euro-Zone Retail Sales (YoY) (JUN)

-1.0%

-2.3%

High

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.4080

1.4274

GBPUSD

1.6239

1.6344

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03 August 2011 06:05 GMT