Dollar and Yen Rise on Global Slowdown Fears, Euro Eyes PMI Data

2012-09-05 06:51:00 Ilya Spivak, Head Strategist, APAC

Talking Points

Dollar, Yen Rise on Disappointing Australian and Chinese Economic Data
Eurozone PMI Revisions May Raise the Stakes for ECB Policy Announcement

The US Dollar and Japanese Yen rose overnight as stocks declined, boosting demand for the go-to haven currencies. The MSCI Asia Pacific regional benchmark equity index fell 1 percent amid global slowdown fears in the wake of disappointing economic data. Australian GDP figures showed output grew 0.6 percent in the second quarter, missing expectations of a 0.7 percent increase. Separately, the AiG Performance of Services gauge showed the non-manufacturing sector contracted at the fastest pace in four months. Meanwhile, the analogous HSBC Services PMI fell to the lowest level in a year.

Final revisions of Augusts’ Eurozone Services PMIs headline the European economic calendar. Key Manufacturing PMI readings were revised lower in the week. More of the same on the service-sector components may point to a deeper slowdown in regional activity, reinforcing hopes for additional stimulus to emerge at Thursday’s ECB rate decision. As we discussed in our weekly forecast, a policy announcement that focuses exclusively on outlining operational details of the central bank’s new bond-buying scheme without offering anything on the growth front may weigh on the Euro and risky assets in general.

Asia Session: What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
22:45	NZD	Value of All Buildings s.a. (2Q)	0.8%	3.0%	-0.4%
23:01	GBP	BRC Shop Price Index (YoY) (AUG)	1.1%	-	1.0%
23:30	AUD	AiG Performance of Service Index (AUG)	42.4	-	46.5
1:30	AUD	GDP (QoQ) (2Q)	0.6%	0.7%	1.4% (R+)
1:30	AUD	GDP (YoY) (2Q)	3.7%	3.7%	4.4% (R+)
2:30	CNY	HSBC Services PMI (AUG)	52.0	-	53.1

Euro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
7:15	CHF	CPI (MoM) (AUG)	0.1%	-0.5%	Medium
7:15	CHF	CPI (YoY) (AUG)	-0.4%	-0.7%	Medium
7:15	CHF	CPI - EU Harmonised (MoM) (AUG)	-	-0.3%	Low
7:15	CHF	CPI - EU Harmonised (YoY) (AUG)	-	-0.8%	Low
7:45	EUR	Italian PMI Services (AUG)	43.3	43.0	Low
7:50	EUR	French PMI Services (AUG F)	50.2	50.2	Low
7:55	EUR	German PMI Services (AUG F)	48.3	48.3	Medium
8:00	EUR	Euro-Zone PMI Services (AUG F)	47.5	47.5	Medium
8:00	EUR	Euro-Zone PMI Composite (AUG F)	46.6	46.6	Medium
8:30	GBP	Official Reserves (Changes) (AUG)	-	$528M	Low
9:00	EUR	Euro-Zone Retail Sales (MoM) (JUL)	-0.2%	0.2%	Medium
9:00	EUR	Euro-Zone Retail Sales (YoY) (JUL)	-1.7%	-1.0%	Medium