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Talking Points:

  • Australian Dollar Down as Capex Slump Fuels RBA Rate Cut Speculation
  • British Pound May Not Find Follow-Through in Revised UK GDP Figures
  • News-Flow from G7 Meeting Eyed for Guidance on Greece Funding Woes

The Australian Dollar underperformed in overnight trade, falling as much as 0.5 percent on average against its leading counterparts. The move followed a disappointing first-quarter Private Capital Expenditure reading.

The report showed capex spending fell 4.4 percent in the first three months of the year, marketing the largest drawdown since the third quarter of 2009. The currency’s decline tracked a drop in Australian front-end bond yields, suggesting the soft data set fueled RBA rate cut speculation.

The Yen briefly the lowest levels since 2002 against the US Dollar as Japan’s benchmark Nikkei 225 stock index spiked to a 15-year high, weighing on the safety-linked currency. Losses proved fleeting however as share prices reversed course.

The second revision of second-quarter UK GDP figures headlines the economic calendar in European trading hours. A slight upgrade showing output expanded 0.4 percent in the first three months of the year is expected. Initial estimates pointed to a 0.3 percent gain.

An upbeat outcome may prove supportive for the British Pound but follow-through seems unlikely to prove lasting considering the outcome’s limited implications for near-term BOE rate hike speculation. Indeed, the central bank’s latest quarterly Inflation Report suggested policymakers’ baseline assumption is for tightening to begin no sooner than mid-2016.

Traders will likewise continue to monitor news-flow emerging from the ongoing G7 finance ministers and central bank chiefs meeting in Dresden. The situation in Greece is likely to feature prominently in the discussion. The markets will be keen to gauge the tone of conversion considering the funding crisis’ formative impact on price action over recent days.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

23:50

JPY

Retail Trade (YoY) (APR)

5.0%

5.5%

-9.7%

23:50

JPY

Retail Sales (MoM) (APR)

0.4%

1.1%

-1.9%

23:50

JPY

Large Retailers' Sales (APR)

8.6%

9.1%

-13.0%

01:30

AUD

Private Capital Expenditure (1Q)

-4.4%

-2.2%

-2.2%

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

06:00

CHF

Trade Balance (APR)

-

2.52B

Low

06:00

CHF

Exports Real (MoM) (APR)

-

1.2%

Low

06:00

CHF

Imports Real (MoM) (APR)

-

-2.4%

Low

06:00

EUR

Import Price Index (MoM) (APR)

0.5%

1.0%

Low

06:00

EUR

Import Price Index (YoY) (APR)

-0.7%

-1.4%

Low

06:20

USD

Fed's Williams Speaks in Singapore

-

-

Medium

08:30

GBP

BBA Loans for House Purchase (APR)

39300

38751

Low

08:30

GBP

GDP (QoQ) (1Q P)

0.4%

0.3%

High

08:30

GBP

GDP (YoY) (1Q P)

2.5%

2.4%

High

08:30

GBP

Private Consumption (QoQ) (1Q P)

0.7%

0.6%

Low

08:30

GBP

Government Spending (QoQ) (1Q P)

0.3%

-0.2%

Low

08:30

GBP

Gross Fixed Capital Formation (QoQ) (1Q P)

0.9%

-0.6%

Low

08:30

GBP

Exports (QoQ) (1Q P)

-0.2%

4.6%

Low

08:30

GBP

Imports (QoQ) (1Q P)

1.2%

1.6%

Low

08:30

GBP

Total Business Investment (QoQ) (1Q P)

1.6%

-0.9%

Low

08:30

GBP

Total Business Investment (YoY) (1Q P)

-

3.7%

Low

08:30

GBP

Index of Services (MoM) (MAR)

0.0%

0.3%

Low

08:30

GBP

Index of Services (3M/3M) (MAR)

0.5%

0.7%

Low

09:00

EUR

Eurozone Economic Confidence (MAY)

103.5

103.7

Low

09:00

EUR

Eurozone Business Climate Indicator (MAY)

0.35

0.32

Low

09:00

EUR

Eurozone Industrial Confidence (MAY)

-3.0

-3.2

Low

09:00

EUR

Eurozone Services Confidence (MAY)

6.7

6.7

Low

09:00

EUR

Eurozone Consumer Confidence (MAY F)

-5.5

-5.5

Medium

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EURUSD

1.0668

1.0787

1.083

1.0906

1.0949

1.1025

1.1144

GBPUSD

1.5163

1.5284

1.5334

1.5405

1.5455

1.5526

1.5647

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

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