Talking Points
- Dollar, Yen Sold on Waning Haven Demand as Stocks Rise in Asia
- Soft UK, Eurozone Economic Data Unlikely to Derail Risk-On Tone
- Australian Dollar Outperforms as RBA Stays in Wait-and-See Mode
The US Dollar and the Japanese Yen declined in overnight trade as Asian stocks advanced, denting demand for the go-to haven currencies. The MSCI Asia Pacific regional benchmark stock index rose 0.6 percent, bolstered by reports of German support for ECB efforts to trim periphery borrowing costs. Arguments in favor of further QE from the Fed’s Eric Rosengren and John Williams, Presidents of the central bank’s Boston and San Francisco branches respectively, were likewise supportive.
The Australian Dollar narrowly outperformed after the Reserve Bank of Australia left the benchmark interest rate unchanged at 3.5 percent, as expected. The statement accompanying the policy announcement continued to project a wait-and-see posture, hinting RBA Governor Glenn Stevens and company are in no hurry to resume the easing cycle.
An update on European economic growth environment comes in the form of UK Industrial Production and Italian GDP figures in the hours ahead. The former release is expected to show output fell 3.5 percent in June, marking the sharpest monthly drop in a decade, while the latter confirms the Eurozone’s third-largest economy shrank for a third consecutive quarter. Separately, German Factory Orders are expected to slip 0.8 percent, reinforcing fears of spreading malaise from the periphery and into the core of the currency bloc.
While certainly not supportive, these outcomes reinforce already well-established expectations of a downturn in regional European growth rather than offer something new into the equation. With that in mind, it seems unlikely that the day’s data set has scope to generate meaningful risk aversion. Indeed, S&P 500 stock index futures are pointing firmly higher, hinting the risk-on mood noted overnight is likely to carry forward.
Asia Session: What Happened
GMT |
CCY |
EVENT |
ACT |
EXP |
PREV |
22:45 |
Average Hourly Earnings (QoQ) (2Q) |
0.2% |
0.5% |
1.3% |
|
22:45 |
NZD |
Private Wages ex Overtime (QoQ) (2Q) |
0.5% |
0.6% |
0.5% |
22:45 |
NZD |
Labor Cost Private Sector (QoQ) (2Q) |
0.5% |
0.5% |
0.5% |
23:01 |
BRC Sales Like-For-Like (YoY) (JUL) |
0.1% |
-0.2% |
1.4% |
|
23:50 |
JPY |
Official Reserve Assets ($) (JUL) |
1272.8B |
- |
1270.6B |
4:30 |
AUD |
RBA Rate Decision (AUG 7) |
3.50% |
3.50% |
3.50% |
Euro Session: What to Expect
GMT |
CCY |
EVENT |
EXP/ACT |
PREV |
IMPACT |
5:45 |
Unemployment Rate s.a. (JUL) |
2.9% (A) |
2.9% |
Medium |
|
5:45 |
CHF |
Unemployment Rate (JUL) |
2.7% (A) |
2.7% |
Medium |
7:00 |
CHF |
Foreign Currency Reserves (JUL) |
406.5B (A) |
365.1B |
Low |
7:15 |
CHF |
Consumer Price Index (MoM) (JUL) |
-0.5% (A) |
-0.3% |
Medium |
7:15 |
CHF |
Consumer Price Index (YoY) (JUL) |
-0.7% (A) |
-1.1% |
Medium |
7:15 |
CHF |
CPI - EU Harmonised (YoY) (JUL) |
-0.3% (A) |
-1.2% |
Medium |
7:15 |
CHF |
CPI - EU Harmonised (MoM) (JUL) |
-0.8% (A) |
-0.2% |
Medium |
8:00 |
Italian Industrial Production sa (MoM) (JUN) |
-1.0% |
0.8% |
Low |
|
8:00 |
EUR |
Italian Industrial Production nsa (YoY) (JUN) |
- |
-6.8% |
Low |
8:00 |
EUR |
Italian Industrial Production wda (YoY) (JUN) |
-6.5% |
-6.9% |
Low |
8:30 |
GBP |
Industrial Production (MoM) (JUN) |
-3.5% |
1.0% |
Medium |
8:30 |
GBP |
Industrial Production (YoY) (JUN) |
-5.3% |
-1.6% |
Medium |
8:30 |
GBP |
Manufacturing Production (MoM) (JUN) |
-4.3% |
1.2% |
Low |
8:30 |
GBP |
Manufacturing Production (YoY) (JUN) |
-5.7% |
-1.7% |
Low |
9:00 |
EUR |
Italy to Approve Spending Cuts |
- |
- |
- |
9:00 |
EUR |
Italian GDP s.a. and w.d.a. (QoQ) (2Q P) |
-0.8% |
-0.8% |
Medium |
9:00 |
EUR |
Italian GDP s.a. and w.d.a. (YoY) (2Q P) |
-2.5% |
-1.4% |
Medium |
10:00 |
EUR |
German Factory Orders n.s.a. (YoY) (JUN) |
-7.0% |
-5.4% |
Medium |
10:00 |
EUR |
German Factory Orders s.a. (MoM) (JUN) |
-0.8% |
0.6% |
Medium |
Critical Levels
CCY |
SUPPORT |
RESISTANCE |
1.2347 |
1.2449 |
|
1.5545 |
1.5664 |
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
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