Talking Points:
- Pound May Decline on Soft UK CPI But Follow-Though May Be Lacking
- NZ Dollar Swoons as Weak 2Q PPI Data Dents RBNZ Rate Hike Outlook
- Aussie Dollar Gains on Risk Appetite Swell After Status-Quo RBA Minutes
UK CPI figures headline the economic in European hours. Consensus forecasts suggest the headline year-on-year inflation rate will slow to 1.8 percent in July, marking a slowdown from the 1.9 percent print recorded in the prior month. UK price-growth data has tended to underperform relative to analysts’ expectations since the beginning of the year, opening the door for a downside surprise.
Such an outcome is likely to weigh on BOE rate hike speculation, pushing the British Pound lower. Follow-through may be limited however. Sterling has been fallen for six consecutive weeks alongside front-end bond yields, suggesting markets have been trimming tightening bets for some time now. Such one-sided price action warns that big-splash volatility risk may be asymmetrically tilting to the upside in the near term.
The New Zealand Dollar underperformed in Asian trading hours, sliding as much as 0.6 percent on average against its leading counterparts. The move reflected softening RBNZ rate hike expectations after second-quarter PPI data proved soft, as expected. Indeed, the Kiwi’s slide tracked a drop in the benchmark New Zealand 10-year bond yield.
The Australian Dollar rose after the release of minutes from Augusts’ RBA meeting. While the document didn’t contain anything particularly novel, the passing of the day’s event risk seemed to clear the way for the sentiment-linked Aussie to catch up with building risk appetite overnight. The MSCI Asia Pacific regional stock index added 0.6 percent, hinting at stronger demand for return-seeking assets (including the Australian unit).
New to FX? START HERE!
Asia Session
|
GMT |
CCY |
EVENT |
ACT |
EXP |
PREV |
|
22:45 |
NZD |
PPI Output (QoQ) (2Q) |
-0.5% |
- |
0.9% |
|
22:45 |
NZD |
PPI Input (QoQ) (2Q) |
-1.0% |
- |
1.0% |
|
1:30 |
AUD |
RBA August Meeting Minutes |
- |
- |
- |
|
3:00 |
NZD |
RBNZ 2yr Inflation Expectation (3Q) |
2.23% |
- |
2.36% |
|
5:00 |
Leading Index (JUN F) |
105.9 |
- |
105.5 |
|
|
5:00 |
Coincident Index (JUN F) |
109.7 |
- |
109.4 |
|
|
5:30 |
Tokyo Dept Store Sales (YoY) (JUL) |
-1.4% |
- |
-4.1% |
|
|
5:30 |
Nationwide Dept Store Sales (YoY) (JUL) |
-2.5% |
- |
-4.6% |
|
|
6:00 |
Machine Tool Orders (YoY) (JUN F) |
- |
37.7% |
European Session
|
GMT |
CCY |
EVENT |
EXP |
PREV |
IMPACT |
|
8:00 |
Eurozone Current Account s.a. (€) (JUN) |
- |
19.5B |
Low |
|
|
8:00 |
Eurozone Current Account n.s.a. (€) (JUN) |
- |
8.9B |
Low |
|
|
8:30 |
GBP |
CPI (MoM) (JUL) |
-0.2% |
0.2% |
High |
|
8:30 |
GBP |
CPI (YoY) (JUL) |
1.8% |
1.9% |
High |
|
8:30 |
GBP |
Core CPI (YoY) (JUL) |
1.9% |
2.0% |
High |
|
8:30 |
GBP |
RPI (MoM) (JUL) |
-0.1% |
0.2% |
Medium |
|
8:30 |
GBP |
RPI (YoY) (JUL) |
2.6% |
2.6% |
Medium |
|
8:30 |
GBP |
RPI Ex Mort. Int. Payments (YoY) (JUL) |
2.6% |
2.7% |
Low |
|
8:30 |
GBP |
PPI Input n.s.a. (MoM) (JUL) |
-1.0% |
-0.8% |
Low |
|
8:30 |
GBP |
PPI Input n.s.a. (YoY) (JUL) |
-6.4% |
-4.4% |
Low |
|
8:30 |
GBP |
PPI Output n.s.a. (MoM) (JUL) |
0.1% |
-0.2% |
Medium |
|
8:30 |
GBP |
PPI Output n.s.a. (YoY) (JUL) |
0.0% |
0.2% |
Medium |
|
8:30 |
GBP |
PPI Output Core n.s.a. (MoM) (JUL) |
0.0% |
0.0% |
Low |
|
8:30 |
GBP |
PPI Output Core n.s.a. (YoY) (JUL) |
0.9% |
1.0% |
Low |
|
8:30 |
GBP |
ONS House Prices (YoY) (JUL) |
10.2% |
10.5% |
Low |
Critical Levels
|
CCY |
Supp 3 |
Supp 2 |
Supp 1 |
Pivot Point |
Res 1 |
Res 2 |
Res 3 |
|
1.3280 |
1.3326 |
1.3345 |
1.3372 |
1.3391 |
1.3418 |
1.3464 |
|
|
1.6675 |
1.6701 |
1.6714 |
1.6727 |
1.6740 |
1.6753 |
1.6779 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To receive Ilya's analysis directly via email, please SIGN UP HERE
Contact and follow Ilya on Twitter: @IlyaSpivak
