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Forex: Aussie Dollar Gains on China Data, Euro Eyes PMI Reports

Forex: Aussie Dollar Gains on China Data, Euro Eyes PMI Reports

Ilya Spivak, Head Strategist, APAC

Talking Points

  • Aussie Dollar Higher After HSBC China PMI Print Tops Forecasts
  • Euro to Advance if Strong PMIs Weigh Against ECB Easing Bets
  • US Dollar May Rise if Fed Speakers Imply Mid-2014 QE End-Point

The Australian Dollar outperformed to start the trading week after HSBC reported that its China Manufacturing PMI gauge of factory-sector activity unexpected rose to 51.2 in September, topping forecasts calling for a print at 50.9. China is Australia’s top trading partner and a critical source of demand for the pivotal mining sector. With that in mind, stronger economic news-flow argues against further RBA interest rate cuts, offering support for the currency. Evolving speculation surrounding Federal Reserve monetary policy may disrupt the Aussie’s advance however. Still, we remain long AUD/USD.

The preliminary set of September’s Eurozone PMI figures headlines the calendar in European hours. The region-wide Composite index is expected to show manufacturing- and service-sector growth accelerated to the fastest since June 2011. French and German PMI readings are likewise expected to show improvement. A pickup in economic activity data may be seen as weighing against the probability additional ECB stimulus, boosting the Euro.

Later in the day, the spotlight shifts to the week’s first round of scheduled speeches from Federal Reserve policymakers. New York Fed President Bill Dudley, Atlanta Fed President Dennis Lockhart, and Dallas Fed President Richard Fisher are all set to cross the wires (though only the first of the three is a current member of the FOMC rate-setting committee). Perhaps the most hawkish message that could emerge is that the timeline to wind down QE3 still envisions an end-point in mid-2014. That would imply a faster pace of stimulus removal than if the Fed began to taper asset purchases this month, boosting the US Dollar.

New to FX? Watch this Video. For live market updates, visit the Real Time News Feed

Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

1:45

CNY

HSBC/Markit Flash Manufacturing PMI (SEP)

51.2

50.9

50.1

Euro Session:

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

7:00

EUR

French PMI Manufacturing (SEP P)

50.1

49.7

Low

7:00

EUR

French PMI Services (SEP P)

49.4

48.9

Low

7:00

CHF

Money Supply M3 (YoY)

-

10.8%

Low

7:00

CHF

KOF Institute Economic Forecast (SEP)

-

-

Low

7:30

EUR

German PMI Manufacturing (SEP A)

52.0

51.8

Medium

7:30

EUR

German PMI Services (SEP A)

53.0

52.8

Medium

8:00

EUR

Euro-Zone PMI Manufacturing (SEP A)

51.6

51.4

Medium

8:00

EUR

Euro-Zone PMI Services (SEP A)

51.0

50.7

Medium

8:00

EUR

Euro-Zone PMI Composite (SEP A)

51.8

51.5

Medium

Critical Levels:

CCY

SUPP 3

SUPP 2

SUPP 1

Pivot Point

RES 1

RES 2

RES 3

EURUSD

1.3422

1.3473

1.3498

1.3524

1.3549

1.3575

1.3626

GBPUSD

1.5860

1.5940

1.5973

1.6020

1.6053

1.6100

1.6180

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

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