Talking Points:
- US Dollar May Rise if Fed-speak Rekindles Mid-Year Rate Hike Speculation
- Australian Dollar Drops as Markets Position for On-Coming RBA Rate Cut
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A quiet economic calendar in European trading hours may see traders looking ahead to Fed-speak for direction cues. Comments from Governor Daniel Tarullo, Chicago Fed President Charles Evans and San Francisco Fed President John Williams – all current voting members of the rate-setting FOMC committee – are due cross the wires.
Rhetoric suggesting the US central bank may look past slow performance in the first quarter and deliver the first post-QE hike in the benchmark lending rate by around mid-year as it hinted at the onset of 2015 is likely to drive the US Dollar higher. The markets have pushed out their expected timeline for the start of the tightening cycle to October. A distinct similarity between weakness in the first quarters of 2014 and 2015 suggests policymakers may see through this year’s stumble as they did 12 months ago even amid calls to slow or pause the “tapering” of asset purchases.
The Australian Dollar faced broad-based selling pressure at the start of the trading week in what appeared to be pre-positioning ahead of tomorrow’s RBA monetary policy announcement. The central bank is widely expected to cut the benchmark lending rate by 25 basis points to a record low of 2 percent, though we see a distinct possibility that the doves will be disappointed.
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Asia Session
| GMT | CCY | EVENT | ACT | EXP | PREV |
|---|---|---|---|---|---|
| 0:30 | AUD | TD Securities Inflation (MoM) (APR) | 0.3% | - | 0.4% |
| 0:30 | AUD | TD Securities Inflation (YoY) (APR) | 1.4% | - | 1.5% |
| 1:00 | NZD | ANZ Commodity Price (APR) | -7.4% | - | 4.6% |
| 1:30 | AUD | ANZ Job Advertisements (MoM) (APR) | 2.3% | - | -1.3% |
| 1:30 | AUD | Building Approvals (MoM) (MAR) | 2.8% | -1.5% | -1.6% |
| 1:30 | AUD | Building Approvals (YoY) (MAR) | 23.6% | 16.7% | 14.6% |
| 1:45 | CNY | HSBC China Mfg PMI (APR F) | 48.9 | 49.4 | 49.2 |
European Session
| GMT | CCY | EVENT | EXP | PREV | IMPACT |
|---|---|---|---|---|---|
| 7:00 | CHF | SNB Sight Deposits | - | - | Low |
| 7:30 | CHF | PMI Manufacturing (APR) | 48.2 | 47.9 | Medium |
| 7:45 | EUR | Markit/ADACI Italy Mfg PMI (APR) | 53.4 | 53.3 | Low |
| 7:50 | EUR | Markit France Mfg PMI (APR F) | 48.4 | 48.4 | Low |
| 7:55 | EUR | Markit/BME Germany Mfg PMI (APR F) | 51.9 | 51.9 | Low |
| 8:00 | EUR | Markit Eurozone Mfg PMI (APR F) | 51.9 | 51.9 | Low |
| 8:30 | EUR | Sentix Investor Confidence (MAY) | 19.1 | 20.0 | Low |
Critical Levels
| CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
|---|---|---|---|---|---|---|---|
| EURUSD | 1.0991 | 1.1106 | 1.1152 | 1.1221 | 1.1267 | 1.1336 | 1.1451 |
| GBPUSD | 1.4656 | 1.4938 | 1.5043 | 1.5220 | 1.5325 | 1.5502 | 1.5784 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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