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Forex: Euro, Kiwi Dollar May Correct Higher to Close the Trading Week

By , Currency Strategist
09 May 2014 03:22 GMT

Talking Points:

  • Australian Dollar Soft on Dovish RBA, Profit-Taking in Asian Trade
  • Quiet European Data Docket Unlikely to Drive FX Market Volatility
  • Euro, Franc and Kiwi Dollar May Rise on Corrective Profit-Taking

The Australian Dollar underperformed in otherwise quiet overnight trade. The currency began the session in corrective having scored impressive gains yesterday following better-than-expected employment figures. The decline was amplified by the release of a dovish-sounding RBA Monetary Policy Statement. The central bank lowered its GDP and inflation forecasts and poured cold water on interest rate hike bets, saying accommodative policy is likely to be appropriate “for some time”.

The economic calendar is relatively quiet in European trading hours. UK Industrial Production figures are expected to show output fell for the first time in four months in March but the outcome is unlikely to mean much for the British Pound beyond reinforcing the amply priced-in standstill on the BOE policy front. Meanwhile, the German Trade Balance report will probably pass with little fanfare as traders’ top concern remains the possibility of ECB intervention following yesterday’s ominous policy announcement.

The US data docket is likewise thin, opening the door for a consolidative tone into the final hours of the trading week. That may produce a round of corrective profit-taking as markets digest the latest burst of volatility. The Aussie and the Japanese Yen may find themselves on the defensive in such a scenario, while the previously beleaguered Euro, Swiss Franc and New Zealand Dollar squeeze out a bit of upside momentum.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

22:45

NZD

Card Spending Retail (MoM) (APR)

0.3%

0.6%

0.0%

22:45

NZD

Card Spending Total (MoM) (APR)

-0.4%

-

-0.2%

23:50

JPY

Official Reserve Assets (APR)

$1282.8B

-

$1279.3B

1:30

CNY

PPI (YoY) (APR)

-2.0%

-1.9%

-2.3%

1:30

CNY

CPI (YoY) (APR)

1.8%

2.1%

2.4%

1:30

AUD

RBA Statement on Monetary Policy

-

-

-

5:00

JPY

Leading Index (MAR P)

106.7

108.9

5:00

JPY

Coincident Index (MAR P)

114.0

113.0

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

6:00

EUR

German Trade Balance (€) (MAR)

17.4B

16.3B

Medium

6:00

EUR

German Current Account (€) (MAR)

14.9B

13.9B

Medium

6:00

EUR

German Exports s.a. (MoM) (MAR)

1.3%

-1.4%

Low

6:00

EUR

German Imports s.a. (MoM) (MAR)

0.6%

0.4%

Low

8:30

GBP

Manufacturing Production (MoM) (MAR)

0.3%

1.0%

Medium

8:30

GBP

Manufacturing Production (YoY) (MAR)

2.9%

3.8%

Medium

8:30

GBP

Industrial Production (MoM) (MAR)

-0.2%

0.9%

Medium

8:30

GBP

Industrial Production (YoY) (MAR)

2.4%

2.7%

Medium

8:30

GBP

Construction Output s.a. (MoM) (MAR)

0.6%

-2.8%

Low

8:30

GBP

Construction Output s.a. (YoY) (MAR)

7.1%

2.8%

Low

8:30

GBP

Visible Trade Balance (£) (MAR)

-9000M

-9094M

Low

8:30

GBP

Trade Balance - Non EU (£) (MAR)

-3000M

-2919M

Low

8:30

GBP

Total Trade Balance (£) (MAR)

-2000M

-2058M

Low

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.3569

1.3729

1.3784

1.3889

1.3944

1.4049

1.4209

GBP/USD

1.6842

1.6893

1.6913

1.6944

1.6964

1.6995

1.7046

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

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09 May 2014 03:22 GMT