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Forex: Dollar Looks to Fedspeak, US Credit Data for QE Taper Clues

By , Currency Strategist
09 September 2013 08:13 GMT

Talking Points

  • US Dollar Looks to Comments from Fed’s Williams to Guide FOMC Bets
  • Japanese Yen Fell as Chinese Exports Data Stocked Carry Trade Demand
  • Aussie Dollar Outperformed to Stat the Trading Week; Long Trade in Play

A quiet economic calendar in European trading hours is likely to see investors looking ahead to the US docket. Scheduled commentary from San Francisco Fed President John Williams is in focus. While Mr Williams is not a member of the rate-setting FOMC committee this year, his speech and subsequent Q&A session mark the last bit of “fed-speak” before next week’s monetary policy announcement. Needless to say, this is likely to generate interest considering that sit-down is expected to produce a reduction of the Fed’s QE3 program. Separately, July’s Consumer Credit reading is expected to print at $12.3 billion, down from $13.82 billion in the prior month.

On balance, a small initial cutback of asset purchases this month is probably priced in at this point. Indeed, opting to do nothing this time around might be problematic from a credibility perspective given Fed officials’ considerable efforts to telegraph the move over recent months. That means the object of speculation at this stage is the trajectory of further “tapering” of QE after September’s outing. With that in mind, news-flow arguing against a sustained stimulus reduction cycle through the year-end (such as a dovish tone from Mr Williams or a particularly disappointing Consumer Credit print) is likely to weigh on the US Dollar, and vice versa.

The Japanese Yen gapped down at the open of the trading week and underperformed against its top counterparts as risk appetite swelled overnight, sending stocks higher and boosting demand for carry trades funded in terms of the perennially low-yielding currency. The MSCI Asia Pacific regional benchmark equity index rose 1 percent wake of better-than-expected Chinese Trade Balance data published over the weekend. The report showed that exports rose 7.2 percent year-on-year in August, marking the largest increase in four months and topping forecasts calling for a 5.5 percent increase. The release stoked optimism about economic growth in the world’s second-largest economy. The Australian Dollar outperformed and we remain long AUDUSD.

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Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

1:30

CNY

Trade Balance (AUG)

28.52B

$20.00B

$17.82B

1:30

CNY

Imports (YoY) (AUG)

7.0%

11.3%

10.9%

1:30

CNY

Exports (YoY) (AUG)

7.2%

5.5%

5.1%

22:45

NZD

Manufacturing Activity Volume (QoQ) (2Q)

-3.4%

-

-0.6%

22:45

NZD

Manufacturing Activity (2Q)

-2.0%

-

0.2%

23:50

JPY

GDP (QoQ) (2Q F)

0.9%

1.0%

0.6%

23:50

JPY

GDP Annualized (2Q F)

3.8%

3.9%

2.6%

23:50

JPY

Nominal GDP (QoQ) (2Q F)

0.9%

1.0%

0.7%

23:50

JPY

Consumer Spending (QoQ) (2Q F)

0.7%

-

0.8%

23:50

JPY

Business Spending (QoQ) (2Q F)

1.3%

1.1%

-0.1%

23:50

JPY

GDP Deflator (YoY) (2Q F)

-0.5%

-0.3%

-0.3%

23:50

JPY

Current Account Total (¥) (JUL)

577.3B

507.7B

336.3B

23:50

JPY

Adjusted Current Account Total (¥) (JUL)

333.7B

313.9B

646.2B

23:50

JPY

Trade Balance - BOP Basis (¥) (JUL)

-943.3B

-862.4B

-139.2B

23:50

JPY

BoP Current Account Balance (YoY) (JUL)

-12.9%

-27.8%

-20.3%

23:50

JPY

Bank Lending Banks ex-Trust (YoY) (AUG)

2.3%

-

2.3%

23:50

JPY

Bank Lending incl Trusts (YoY) (AUG)

2.0%

-

2.0%

0:00

NZD

QV House Prices (YoY) (AUG)

8.5%

-

8.1%

1:30

CNY

Consumer Price Index (YoY) (AUG)

2.6%

2.6%

2.7%

1:30

CNY

Producer Price Index (YoY) (AUG)

-1.6%

-1.7%

-2.3%

1:30

AUD

Home Loans (MoM) (JUL)

2.4%

2.0%

2.6%

1:30

AUD

Investment Lending (MoM) (JUL)

2.9%

-

-0.1%

1:30

AUD

Value of Loans (MoM) (JUL)

0.0%

-

2.4%

1:30

AUD

ANZ Job Advertisements (MoM) (AUG)

-2.0%

-

-1.1%

4:30

JPY

Bankruptcies (YoY) (AUG)

-15.3%

-

-0.1%

5:00

JPY

Consumer Confidence Index (AUG)

43.0

44.0

43.6

Euro Session:

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

5:45

CHF

Unemployment Rate (AUG)

3.0% (A)

3.0%

Medium

5:45

CHF

Unemployment Rate s.a. (AUG)

3.2% (A)

3.2%

Medium

6:00

JPY

Eco Watchers Survey: Current (AUG)

51.2 (A)

52.3

Low

6:00

JPY

Eco Watchers Survey: Outlook (AUG)

51.2 (A)

53.6

Low

7:15

CHF

Retail Sales (Real) (YoY) (JUL)

0.8% (A)

2.3%

Medium

8:30

EUR

Euro-Zone Sentix Investor Confidence (SEP)

-3.5

-4.9

Low

Critical Levels:

CCY

SUPP 3

SUPP 2

SUPP 1

Pivot Point

RES 1

RES 2

RES 3

EURUSD

1.2989

1.3073

1.3126

1.3157

1.321

1.3241

1.3325

GBPUSD

1.5394

1.551

1.5572

1.5626

1.5688

1.5742

1.5858

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

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09 September 2013 08:13 GMT