We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Mixed
USD/JPY
Bearish
Gold
Mixed
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • Commodities Update: As of 03:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.43% Silver: -0.09% Gold: -0.15% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/s7cmjiLqBH
  • Forex Update: As of 03:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.23% 🇳🇿NZD: 0.20% 🇬🇧GBP: 0.10% 🇨🇦CAD: 0.06% 🇨🇭CHF: 0.05% 🇯🇵JPY: -0.12% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/5B80pXcSaI
  • The #ASX200 stock index hit record highs this year but those days seem unlikely to return anytime soon as even equity buckles before the #coronavirus outbreak. https://www.dailyfx.com/forex/fundamental/article/special_report/2020/02/25/Australian-Dollar-ASX-Recouple-in-Misery-as-Coronavirus-Spreads.html?utm_source=Twitter&utm_medium=Cottle&utm_campaign=twr #AUD, #AUDUSD, #Australianbonds
  • LIVE NOW! Senior Currency Strategist @IlyaSpivak discusses the technical and fundamental $AUDUSD outlook for the week ahead here - https://www.dailyfx.com/webinars/378612179?CHID=9&QPID=917720&utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.61%, while traders in USD/CAD are at opposite extremes with 69.79%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/fxZYAt6ZyZ
  • The $GBP recoiled from chart resistance against the US Dollar, setting the stage for prices to resume a bearish trend reversal triggered mid-January. Get your market update from @IlyaSpivak here:https://t.co/lVpyZkIfJt https://t.co/PTk2I1Z0v6
  • LIVE IN 30 MIN: Senior Currency Strategist @IlyaSpivak discusses the technical and fundamental $AUDUSD outlook for the week ahead here - https://www.dailyfx.com/webinars/378612179?CHID=9&QPID=917720&utm_source=Twitter&utm_medium=DFXGeneric&utm_campaign=twr
  • Join @IlyaSpivak 's #webinar at 10:00 PM ET / 3:00 AM GMT to prepare for the week ahead in trading $AUDUSD Register here: https://t.co/sZNWPVRHA0 https://t.co/pUWqBnuatw
  • Seems like the "risk-on" tone can be traced to Japan confirming the test of an anti-flu drug on #coronavirus patients. Then South Korea reported 60 further Wuhan virus cases which is less than the 70 increase prior. #SPX futures up, $USDKRW down 0.8% - https://t.co/b7T88yZC9N https://t.co/oxibKzBgKc
  • $AUD broke critical range support against its US counterpart, suggesting deeper losses are ahead even after prices hit an 11-year low. Get your market update from @IlyaSpivak here:https://t.co/45YpJRjDYj https://t.co/3Huj8B49nO
Dollar Faces Retail Sales Data but Fed Decision Still Overwhelming

Dollar Faces Retail Sales Data but Fed Decision Still Overwhelming

2011-09-14 05:00:00
John Kicklighter, Chief Currency Strategist
Share:
  • Dollar Faces Retail Sales Data but Fed Decision Still Overwhelming
  • Euro May Soon Build an Immunity to Unsubstantiated Headlines
  • New Zealand Dollar: Preparing for the RBNZ’s Decision on Rates
  • British Pound Tumbles after BoE Member Posen Ups the Call for Stimulus
  • Australian Dollar Tumbles Despite Confidence Report, Rate Outlook Dire
  • Swiss Franc Virtually Unchanged Just off 1.20 Level Against Euro
  • Gold Volume Drops to Seven Day Low – Comparable Levels to Last Breakout

Dollar Faces Retail Sales Data but Fed Decision Still Overwhelming

We still have more than a week until the Federal Reserve is scheduled to wrap up its two day discussion about monetary policy and announce its decided path to the rest of the trading world. However, the influence this particular event can have on the broader FX and capital markets is so expansive that its mere presence acts as an anchor to the development of new trends. Given the progress of the Dow Jones FXCM Dollar Index (ticker = USDollar) and the majors, that may seem an unusual claim; but without this headwind, the benchmark could be much further along. Looking to the Index, that would mean the break to five-month highs above 9,760 could have found meaningful follow even after rallying over 350 points in the previous two weeks. For its crosses, similar liberation could lead the greenback to significant gains against high yielding currencies and fellow safe havens – rather than just the troubled European-based pairs.

To override the threat that the central bank will pursue a third quantitative easing program or a version of ‘Operation Twist’, market conditions need to play to the currency’s strong point – liquidity. Demand for liquidity comes when the financial backdrop is so strained that there is almost no thought of reward and only a scramble for the deepest and safest market. Most panicked traders would agree that market would be Treasuries and the dollar. Yet, we see the S&P 500 (our favored measure of sentiment) continues to carve out the volatile range that has sidelined any prominent trends for more than a month now. This is because another side effect of a possible increase in stimulus is a hesitation from speculators from unwinding their exposure on the hope that they could find a bounce through the normal moral hazard channels. The closer we are to this fateful day, the more entrenched the markets will become – even though doubt is running very high.

In the meantime, those looking for volatility should turn their attention to the scheduled event risk in the upcoming New York session. The retail sales and producer price index figures are potentially worth a burst of activity. Of the two, the consumer spending figure is far more influential as it taps into the prominent concern that the US economy is slowing to the point where recession and financial crisis are real possibilities. Expectations are relatively modest (0.2 percent growth in August); but surprise works best when the market is complacent.

Related:Discuss the Dollar in the DailyFX Forum, John’s Video:EURUSD at Risk of Rally as Market Grows Numb to Headlines

Euro May Soon Build an Immunity to Unsubstantiated Headlines

It seems the situation in Europe worsens with every day that passes. That is a belief that certainly has its bearings in tangible fundamental developments; but it is also heavily skewed by market-driven speculation. On the material side, we see that the Greek one-year government bond yields have driven ahead to 135 percent while sovereign credit default swaps are pricing in a 98 percent chance of a hard default with expectations that bond holders will only recover 40 percent of their initial investment. Another unambiguous development was the higher rates and lower demand for Italy’s 5.6 billion euro bond auction this past session. In contrast, the back and forth with French bank CEOs claiming they have ample liquidity, a Sarkozy spokesman dismissing speculation that French and German policy heads were meeting to establish a further rescue and a former BoE member’s opinion that Greece should “default big” (he is best known for manning the Argentinean central bank after its default) is all conjecture that can eventually be retraced. After enough of these false starts, a tolerance is built up to further headlines that don’t seem to go anywhere. We have seen this resistance build up countless times before; and it can certainly happen for an exhausted euro.

New Zealand Dollar: Preparing for the RBNZ’s Decision on Rates

The biggest scheduled event in the coming 24 hours is arguably the RBNZ rate decision. This meeting is particularly interesting as New Zealand Dollar is currently the only major that is expected to see a hike in the coming year. This stubborn outlook is firmly rooted on Governor Bollard’s suggestion that he would likely replace the 50 bps he cut from the earlier this year in the wake of the Christchurch earthquake. The market has taken him at his word; but the policy official hasn’t seemed as hawkish since global conditions have soured. Will he squash hike forecasts?

British Pound Tumbles after BoE Member Posen Ups the Call for Stimulus

There are many people with loud opinions on the Bank of England; and FX rate speculators are essentially left in the dark. However, after the bank’s remaining hawks dropped into the consensus, we are still left with the group’s most ardent dove – Adam Posen. And, as he is the only one talking up; his suggestion that conditions are worsening and warrant an additional 100 billion pounds of stimulus dominates the outlook.

Australian Dollar Tumbles Despite Confidence Report, Rate Outlook Dire

A Westpac consumer confidence report marked its biggest jump in 14 months this morning; but markets were generally unimpressed. Instead, the Australian dollar would follow risk trends and its discouraging interest rate outlook to a sharp 160-point decline for AUDUSD in the span of a few hours. The Asian session isn’t as quiet as it used to be.

Swiss Franc Virtually Unchanged Just off 1.20 Level Against Euro

If you were to take a look at a daily chart of EURCHF, it would look like the market was closed through past session. This is what a strengthening franc looks like against the ramparts of direct SNB intervention. Speculative interest in the Swiss has certainly dried up against the euro; but risk aversion flows are a natural force that the central bank isn’t properly fighting.

Gold Volume Drops to Seven Day Low – Comparable Levels to Last Breakout

Both the amplitude of gold’s daily swing and the volume behind the move eased this past session. Another victim of the uncertainty of stimulus from the United States and a deteriorating financial situation in the Euro-area; gold bugs need a definitive reason to bid up the expensive currency rather than just the rumor-mongering that has generated such dramatic swings recently.

For Real Time Forex News, visit: http://www.dailyfx.com/real_time_news/

**For a full list of upcoming event risk and past releases, go to www.dailyfx.com/calendar

ECONOMIC DATA

Next 24 Hours

GMT

Currency

Release

Survey

Previous

Comments

0:30

AUD

Westpac Consumer Confidence (SEP)

-3.5%

Consumer confidence may fall on slower global recovery, cautious bank

0:30

AUD

Westpac Consumer Confidence Index(SEP)

89.6

1:00

AUD

DEWR Internet Skilled Vacancies (MoM) (AUG)

-0.8%

Preliminary labor numbers may moderate

1:30

AUD

Dwelling Starts (Q2)

2.0%

3.1%

May have second month of growth

3:00

NZD

Non Resident Bond Holdings (AUG)

60.1%

Interest could increase on rate expectation

4:00

JPY

Tokyo Condominium Sales (YoY) (AUG)

-1.3%

Sales low on decreasing demand

4:30

JPY

Industrial Production (MoM) (JUL F)

0.6%

Final revisions of Japanese industrial and manufacturing data could show slowdown in rebuilding

4:30

JPY

Industrial Production (YoY) (JUL F)

-2.8%

4:30

JPY

Capacity Utilization (MoM) (JUL)

5.2%

6:00

JPY

Machine Tool Orders (YoY) (AUG F)

15.3%

7:15

CHF

Producer & Import Prices (MoM) (AUG)

-0.4%

-0.7%

Drop in producer prices may be last month before SNB intervention

7:15

CHF

Producer & Import Prices (YoY) (AUG)

-1.1%

-0.6%

8:30

GBP

Claimant Count Rate (AUG)

5.0%

4.9%

British labor data expected to improve moderately, though BoE still cautious to start tightening

8:30

GBP

Jobless Claims Change (AUG)

35.0K

37.1K

8:30

GBP

Average Weekly Earnings (3M/YoY) (JUL)

2.7%

2.6%

8:30

GBP

Weekly Earnings exBonus (3M/YoY) (JUL)

2.1%

2.2%

8:30

GBP

ILO Unemployment Rate (3M) (JUL)

7.9%

7.9%

9:00

EUR

Euro-Zone Industrial Production w.d.a. (YoY) (JUL)

4.6%

2.6%

Zone-wide production expected to increase in July on confidence

9:00

EUR

Euro-Zone Industrial Production s.a. (MoM) (JUL)

1.5%

-0.8%

11:00

USD

MBA Mortgage Applications (SEP 9)

-4.9%

Weekly data indicates direction of housing

12:30

CAD

Capacity Utilization Rate (Q2)

78.0%

79.0%

Demand could fall on US slowdown

12:30

USD

Producer Price Index (MoM) (AUG)

-0.1%

0.2%

US producer prices expected to be led by non-core items; FOMC reaction could be muted as recovery slows

12:30

USD

PPI Ex Food & Energy (MoM) (AUG)

0.2%

0.4%

12:30

USD

Producer Price Index (YoY) (AUG)

6.4%

7.2%

12:30

USD

PPI Ex Food & Energy (YoY) (AUG)

2.6%

2.5%

12:30

USD

Advance Retail Sales (AUG)

0.2%

0.5%

Decline in sales points to relaxing consumer confidence, less spending

12:30

USD

Retail Sales Less Autos (AUG)

0.2%

0.5%

14:00

USD

Business Inventories (JUL)

0.5%

0.3%

Investment spending may improve

14:30

USD

DOE U.S. Crude Oil Inventories (SEP 9)

-3963K

Weekly energy levels may show inventories return to surplus on decreasing demand

14:30

USD

DOE Cushing OK Crude Inventory (SEP 9)

-396K

14:30

USD

DOE U.S. Distillate Inventory (SEP 9)

709K

14:30

USD

DOE U.S. Gasoline Inventories (SEP 9)

199K

21:00

NZD

Reserve Bank of New Zealand Rate Decision

2.50%

2.50%

Major data of Asian session: RBNZ still expected to undo post-earthquake rate cut

22:30

NZD

Business NZ Performance of Manu Index (SEP 9)

53.2

Manufacturing health trending weaker

SUPPORT AND RESISTANCE LEVELS

CLASSIC SUPPORT AND RESISTANCE - 18:00 GMT

Currency

EUR/USD

GBP/USD

USD/JPY

USD/CHF

USD/CAD

AUD/USD

NZD/USD

EUR/JPY

GBP/JPY

Resist 2

1.4500

1.6745

86.00

0.9050

1.0275

1.0750

0.9020

113.50

146.05

Resist 1

1.4000

1.6600

81.50

0.8840

1.0000

1.0800

0.8750

110.00

140.00

Spot

1.3693

1.5788

76.87

0.8794

0.9873

1.0313

0.8249

105.26

121.35

Support 1

1.3500

1.5700

76.35

0.7800

0.9425

1.0200

0.7745

104.00

121.00

Support 2

1.2900

1.5350

75.50

0.7500

0.9055

0.9925

0.6850

100.00

119.00

CLASSIC SUPPORT AND RESISTANCE EMERGING MARKETS 18:00 GMTSCANDIES CURRENCIES 18:00 GMT

Currency

USD/MXN

USD/TRY

USD/ZAR

USD/HKD

USD/SGD

Currency

USD/SEK

USD/DKK

USD/NOK

Resist 2

13.8500

1.8235

7.4025

7.8165

1.3650

Resist 2

7.5800

5.6625

6.1150

Resist 1

12.5000

1.8000

7.3500

7.8075

1.3250

Resist 1

6.5175

5.3100

5.7075

Spot

12.8763

1.7653

7.3001

7.8042

1.2413

Spot

6.6644

5.4394

5.6078

Support 1

11.5200

1.6500

6.5575

7.7490

1.2000

Support 1

6.0800

5.1050

5.3040

Support 2

11.4400

1.5725

6.4295

7.7450

1.1800

Support 2

5.8085

4.9115

4.9410

INTRA-DAY PIVOT POINTS 18:00 GMT

Currency

EUR/USD

GBP/USD

USD/JPY

USD/CHF

USD/CAD

AUD/USD

NZD/USD

EUR/JPY

GBP/JPY

Resist 2

1.3844

1.5915

77.42

0.8933

1.0024

1.0430

0.8326

106.33

122.90

Resist 1

1.3769

1.5851

77.14

0.8863

0.9948

1.0372

0.8287

105.80

122.12

Pivot

1.3663

1.5807

76.98

0.8811

0.9902

1.0317

0.8234

105.10

121.73

Support 1

1.3588

1.5743

76.70

0.8741

0.9826

1.0259

0.8195

104.57

120.96

Support 2

1.3482

1.5699

76.54

0.8689

0.9780

1.0204

0.8142

103.87

120.57

INTRA-DAY PROBABILITY BANDS 18:00 GMT

\Currency

EUR/USD

GBP/USD

USD/JPY

USD/CHF

USD/CAD

AUD/USD

NZD/USD

EUR/JPY

GBP/JPY

Resist. 3

1.3920

1.5994

77.79

0.8945

0.9989

1.0493

0.8401

107.22

123.34

Resist. 2

1.3863

1.5942

77.56

0.8907

0.9960

1.0448

0.8363

106.73

122.84

Resist. 1

1.3807

1.5891

77.33

0.8869

0.9931

1.0403

0.8325

106.24

122.35

Spot

1.3693

1.5788

76.87

0.8794

0.9873

1.0313

0.8249

105.26

121.35

Support 1

1.3579

1.5685

76.41

0.8719

0.9815

1.0223

0.8173

104.28

120.36

Support 2

1.3523

1.5634

76.18

0.8681

0.9786

1.0178

0.8135

103.79

119.86

Support 3

1.3466

1.5582

75.95

0.8643

0.9757

1.0133

0.8097

103.30

119.37

v

Written by: John Kicklighter, Senior Currency Strategist for DailyFX.com

To receive John’s reports via email or to submit Questions or Comments about an article; email jkicklighter@dailyfx.com

Follow John on twitter at http://www.twitter.com/JohnKicklighter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.