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US Factory Orders, Fed-Speak in Focus on QE "Taper" Speculation

US Factory Orders, Fed-Speak in Focus on QE "Taper" Speculation

Ilya Spivak, Head Strategist, APAC

US Factory Orders data and scheduled remarks from central bank officials are in focus as speculation about “tapering” Fed QE efforts remains at center stage.

Talking Points

  • US Factory Orders, Fed-Speak Key with QE “Taper” Outlook in Focus
  • Eurozone PPI Improvement Could Boost Euro on ECB Policy Expectations
  • UK Construction PMI May Help Scatter BOE Stimulus Expansion Bets

The spotlight remains on the central macro theme dominating the markets’ attention over recent weeks: the forthcoming “tapering” of Federal Reserve QE efforts. May’s US Factory Orders figure headlines an otherwise lackluster set of scheduled event risk, with economists penciling in a 2 percent increase. That would mark the strongest print in three months, which may bolster the case for a relatively sooner cutback in asset purchases and boost the US Dollar.

“Fed-speak” may undermine anti-QE speculation however as New York Fed President Bill Dudley and Governor Jerome Powell take to the wires. Both were effective at talking down tapering expectations last week and a similar outing this time around may once again prove potent absent heftier offsetting economic news-flow.

The economic calendar is relatively quiet in European trading hours. June’s UK Construction PMI reading is expected to show growth in sector activity accelerated to the fastest in 13 months. The release comes on the heels of a better-than-expected Manufacturing PMI print yesterday and may weigh against expectations of an increase in Bank of England stimulus efforts, setting the tone for this week’s policy announcement and offering a lift to the British Pound.

Separately, Eurozone PPI figures are due to show the year-on-year wholesale price growth rate held steady in May after slipping into negative territory in the prior month. While this hardly enough of a victory for the Euro to celebrate in earnest, the narrow improvement may lend a bit of support to the single currency as prices continue to track investors’ priced-in policy expectations.

Capitalize on Shifts in Market Mood with the DailyFX Speculative Sentiment Index

Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

23:50

JPY

Monetary Base (YoY) (JUN)

36.0%

-

31.6%

23:50

JPY

Monetary Base (End of Period) (¥) (JUN)

173.1T

-

159.2T

1:00

NZD

ANZ Commodity Price (JUN)

-3.7%

-

-1.6%

1:30

JPY

Labor Cash Earnings (YoY) (MAY)

0.0%

-

0.0%

4:30

AUD

Reserve Bank of Australia Rate Decision

2.75%

2.75%

2.75%

Euro Session:

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

8:30

GBP

PMI Construction (JUN)

51.2

50.8

Medium

9:00

EUR

Euro-Zone PPI (MoM) (MAY)

-0.2%

-0.6%

Low

9:00

EUR

Euro-Zone PPI (YoY) (MAY)

0.0%

-0.2%

Low

Critical Levels:

CCY

SUPPORT

RESISTANCE

EURUSD

1.2983

1.3085

GBPUSD

1.5184

1.5249

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

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