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Dollar Selling Extends into Asian Trade, Eurozone PMI Data on Tap

Dollar Selling Extends into Asian Trade, Eurozone PMI Data on Tap

2012-08-23 05:57:00
Ilya Spivak, Head Strategist, APAC
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Talking Points

  • US Dollar Selling Continues in Asia as FOMC Minutes Feed QE3 Outlook
  • Australian Dollar Lags Comm Bloc Counterparts on Soft Chinese PMI Data
  • Eurozone PMIs in Focus as the Next Key Inflection Point for Risk Trends

The US Dollar continued to edge lower against its top counterparts in overnight trade, extending a selloff sparked in the wake of minutes from Augusts’ Federal Reserve policy meeting. The report showed that many FOMC members thought additional easing would “likely be warranted fairly soon unlessincoming data point to a “substantial and sustainablestrengthening in the economic recovery.

The remarks stoked hopes that additional stimulus would boost US demand for Asian exports, sending an MSCI benchmark gauge of regional stock performance 0.8 percent higher. The risk-sensitive commodity bloc currencies outperformed but the Australian Dollar lagged behind its counterparts after the HSBC Chinese Manufacturing PMI measure dropped to 47.8 in August, showing factory-sector activity shrank at the fastest pace since November 2011. China is Australia’s top export market and key source of demand driving its mining-sector boom.

Looking ahead, the spotlight turns to the preliminary set of Augusts’ Eurozone PMI figures. Another print below the 50 “boom-bust” level on the region-wide measure is expected to show manufacturing- and service-sector activity shriveled for the seventh consecutive month, though the pace of contraction remained unchanged from July.

The deep slump in Eurozone economic growth represents the most significant headwind facing global output this year. With that in mind, any signs of stabilization perceptible from the PMI data set are likely to boost risk appetite and compound downward pressure on the US Dollar. Needless to say, disappointing results have scope to dent sentiment and offer the greenback a lifeline as haven demand returns.

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

2:00

CNY

Conference Board Leading Index (JUL)

236.4

-

234.8

2:30

CNY

HSBC Flash Manufacturing PMI (AUG)

47.8

-

49.3

Euro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

6:00

CHF

Trade Balance (CHF) (JUL)

2.19B

Medium

6:00

CHF

Exports (MoM) (JUL)

0.5%

-2.6%

Low

6:00

CHF

Imports (MoM) (JUL)

-

-3.1%

Low

6:00

EUR

German GDP s.a. (QoQ) (2Q F)

0.3%

0.3%

Medium

6:00

EUR

German GDP n.s.a. (YoY) (2Q F)

0.5%

0.5%

Medium

6:00

EUR

German GDP w.d.a. (YoY) (2Q F)

1.0%

1.0%

Medium

6:00

EUR

German Imports (2Q)

1.0%

0.0%

Low

6:00

EUR

German Exports (2Q)

1.2%

1.7%

Low

6:00

EUR

German Domestic Demand (2Q)

-

-0.3%

Low

6:00

EUR

German Capital Investment (2Q)

-1.5%

-1.1%

Low

6:00

EUR

German Construction Investment (2Q)

2.0%

-1.3%

Low

6:00

EUR

German Private Consumption (2Q)

0.2%

0.4%

Low

6:00

EUR

German Government Spending (2Q)

0.2%

0.2%

Low

7:00

EUR

French PMI Manufacturing (AUG P)

43.7

43.4

Medium

7:00

EUR

French PMI Services (AUG P)

50.0

50.0

Medium

7:30

EUR

German PMI Manufacturing (AUG A)

43.4

43.0

High

7:30

EUR

German PMI Services (AUG A)

50.1

50.3

High

8:00

EUR

Euro-Zone PMI Composite (AUG A)

46.5

46.5

High

8:00

EUR

Euro-Zone PMI Services (AUG A)

47.7

47.9

High

8:00

EUR

Euro-Zone PMI Manufacturing (AUG A)

44.2

44.0

High

8:30

GBP

BBA Loans for House Purchase (JUL)

27250

26269

Low

10:00

GBP

CBI Reported Sales (AUG)

16

11

Low

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.2461

1.2606

GBPUSD

1.5805

1.5958

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

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

To be added to Ilya's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com

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