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Forex: US Dollar Hoping to Find a Reprieve in Yellen Testimony

By , Currency Strategist
07 May 2014 04:16 GMT

Talking Points:

  • NZ Dollar Sinks as RBNZ’s Wheeler Threatens FX Market Intervention
  • Euro May Not Find Volatility in German Factory Orders, EZ PMI Data
  • US Dollar Hoping for a Lifeline as Fed’s Yellen Testifies to Congress

The New Zealand Dollar underperformed in otherwise quiet overnight trade following ominous comments from RBNZ Governor Graeme Wheeler. The central bank chief said the currency is unsustainably overvalued and threatened to intervene against the exchange rate if fundamentals worsen. The Kiwi slid as much as 0.6 percent on average against its leading counterparts.

The economic calendar is relatively quiet in European hours. The March set of German Factory Orders and April’s Eurozone Retail PMI figures headline the docket. These outcomes may not generate meaningful follow-through from the Euro however, with activity data likely playing second fiddle to the disinflation issue and its implications for the ECB. With that in mind, the single currency will probably have to wait Thursday’s monetary policy announcement to find a potent catalyst on the domestic front.

Later in the day, the spotlight turns to Fed Chair Janet Yellen, who is scheduled to testify before the Joint Economic Committee of Congress on the outlook for the US economy and the direction of monetary policy. Needless to say, the markets will be most concerned with what her comments imply about the continuity of the Fed’s QE “tapering” cycle and the possible timing of an eventual interest rate hike. The US Dollar sank to the lowest level in six months yesterday signs of firm commitment to policy normalization in Yellen’s remarks may offer a lifeline to the beleaguered currency.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

22:45

NZD

Unemployment Rate (1Q)

6.0%

5.9%

6.0%

22:45

NZD

Employment Change (QoQ) (1Q)

0.9%

0.6%

1.0%

22:45

NZD

Employment Change (YoY) (1Q)

3.7%

3.4%

3.0%

22:45

NZD

Participation Rate (QoQ) (1Q)

69.3%

68.8%

68.9%

22:45

NZD

Average Hourly Earnings (QoQ) (1Q)

0.7%

1.0%

0.3%

22:45

NZD

Private Wages incl Overtime (QoQ) (1Q)

0.3%

0.5%

0.6%

22:45

NZD

Private Wages ex Overtime (QoQ) (1Q)

0.3%

0.5%

0.6%

23:01

GBP

BRC Shop Price Index (YoY) (APR)

-1.4%

-0.8%

-1.7%

23:15

JPY

Markit Services PMI (APR)

46.4

-

52.2

23:15

JPY

Markit/JMMA Composite PMI (APR)

46.3

-

52.8

23:30

AUD

AiG Perf of Construction Index (APR)

45.9

-

46.2

23:50

JPY

BOJ April 7-8 Meeting Minutes

-

-

-

1:30

AUD

Retail Sales Ex Inflation(QoQ) (1Q)

1.2%

1.6%

1.1%

1:30

AUD

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

0.1%

0.4%

0.3%

1:45

CNY

HSBC China Services PMI (APR)

51.4

-

51.9

1:45

CNY

HSBC China Composite PMI (APR)

49.5

-

49.3

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

5:45

CHF

Unemployment Rate s.a. (APR)

3.2%

3.2%

Medium

5:45

CHF

Unemployment Rate (APR)

3.2%

3.3%

Medium

6:00

EUR

German Factory Orders n.s.a. (YoY) (MAR)

4.3%

6.1%

Medium

6:00

EUR

German Factory Orders s.a. (MoM) (MAR)

0.3%

0.6%

Medium

6:30

AUD

Foreign Reserves (A$) (APR)

-

62.2B

Low

7:00

CHF

Foreign Currency Reserves (CHF) (APR)

438.4B

437.9B

Low

7:30

EUR

German Construction PMI (APR)

-

52.5

Low

8:00

GBP

New Car Registrations (YoY) (APR)

-

17.7%

Low

8:10

EUR

Markit German Retail PMI (APR)

-

50.2

Low

8:10

EUR

Markit French Retail PMI (APR)

-

50.0

Low

8:10

EUR

Markit Italian Retail PMI (APR)

-

46.5

Low

8:10

EUR

Markit Eurozone Retail PMI (APR)

-

49.2

Low

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.3759

1.3838

1.3883

1.3917

1.3962

1.3996

1.4075

GBP/USD

1.6683

1.6814

1.6895

1.6945

1.7026

1.7076

1.7207

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

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07 May 2014 04:16 GMT