The Euro may face selling pressure on swelling ECB rate hike bets as inflation hits a three month low. The Yen is vulnerable if US economic data boosts risk appetite.
Talking Points
- Japanese Yen Sinks as Mood’s Warns on Negative Impact of Political Gridlock
- US ISM Data May Weigh Boost Dollar on Signs Economic Momentum is Slowing
- UK Manufacturing PMI Unlikely to Produce Lasting British Pound Volatility
The Japanese Yen underperformed in overnight trade, down as much as 0.5 percent against its leading counterparts. Forex traders sold the currency after Moody’s said the potential cancellation of bond auctions because of political gridlock over a debt-financing bill is “credit-negative”. The ratings giant added that smooth operation of the bond market is “crucial [because] not only is Japan's gross general government debt the highest of any advanced country, but its gross financing needs are also the most burdensome of any advanced country.”
Looking ahead, the spotlight falls on the US ISM Manufacturing report. Expectations suggest factory-sector activity narrowly slowed in October. Such an outcome may weigh on sentiment, interpreted by traders to indicate ebbing momentum behind US economic growth after a strong showing in September. That stands to weigh against hopes that a firmer US recovery will help offset weakness in Europe and Asia, denting risk appetite and boosting demand for the safe-haven US Dollar vis-à-vis the majors. The ADP Employment Change reading is likewise on tap, with forecasts pointing to a print at 135K in October following a revised 88.2K reading in the prior month.
UK Manufacturing PMI data headlines a relatively quiet set of European economic releases. Economists pencil in a reading at 48.0, showing the industrial sector contracted for the sixth consecutive month. The outcome seems unlikely to yield a lasting response from price action however given its limited implications for BOE monetary policy, where officials appear firmly planted on the sidelines as they assess the impact of the latest round of QE and the new FLS scheme.
Asia Session: What Happened
GMT |
CCY |
EVENT |
ACT |
EXP |
PREV |
21:30 |
AiG Performance of Manufacturing Index |
45.2 |
- |
44.1 |
|
0:30 |
AUD |
Export Price Index (QoQ) (3Q) |
-6.4% |
-6.4% |
0.9% (R-) |
0:30 |
AUD |
Import Price Index (QoQ) (3Q) |
-2.4% |
-1.2% |
2.4% |
1:00 |
CNY |
Manufacturing PMI (OCT) |
50.2 |
50.2 |
49.8 |
1:45 |
CNY |
HSBC PMI Manufacturing (OCT) |
49.5 |
49.1 |
47.9 |
5:00 |
JPY |
Vehicle Sales (YoY) (OCT) |
-9.0% |
- |
-8.1% |
5:30 |
AUD |
RBA Commodity Price Index (OCT) |
87.3 |
- |
89.3 (R-) |
5:30 |
AUD |
RBA Commodity Index SDR (YoY) (OCT) |
-16.0% |
- |
-15.7% (R-) |
Euro Session: What to Expect
GMT |
CCY |
EVENT |
EXP |
PREV |
IMPACT |
7:00 |
GBP |
Nationwide House prices s.a. (MoM) (OCT) |
0.1% |
-0.4% |
Medium |
7:00 |
GBP |
Nationwide House prices n.s.a. (YoY) (OCT) |
-1.2% |
-1.4% |
Medium |
8:15 |
Retail Sales - Real (YoY) (SEP) |
- |
5.9% |
Low |
|
8:30 |
CHF |
PMI Manufacturing (OCT) |
44.7 |
43.6 |
Medium |
9:30 |
GBP |
PMI Manufacturing (OCT) |
48.0 |
48.4 |
Medium |
Critical Levels
CCY |
SUPPORT |
RESISTANCE |
1.2901 |
1.3005 |
|
1.6085 |
1.6183 |
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak
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