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Currencies to Look Past BOE Rate Decision as Greece Crisis Looms Large

Currencies to Look Past BOE Rate Decision as Greece Crisis Looms Large

Ilya Spivak, Head Strategist, APAC

Talking Points:

A monetary policy announcement from the Bank of England headlines the economic calendar in European trading hours but seems unlikely to generate a significant from the British Pound. The central bank’s latest quarterly Inflation Report hinted no rate cuts would materialize until mid-2016. Policymakers don’t release an explanatory statement absent a change in policy, meaning today’s outing will probably prove to be a non-event.

Meanwhile, negotiations between Greece and its creditors are expected to continue, with markets clued to the headlines for a progress report. Agreement on a set of proposals concocted at a top-level meeting in Berlin earlier in the week proved elusive yesterday but debate is set to continue. Traders have been sanguine on the process thus far, with Greek bond yields falling and the Euro rallying in the past two days.

The Australian Dollar faced selling pressure in overnight trade, falling as much as 0.8 percent on average against its top counterparts, after a disappointing set of economic data rekindled RBA interest rate cut speculation. Indeed, the Aussie’s descent tracked a parallel pullback in front-end bond yields.

The trade balance deficit ballooned to -A$3.9 billion, disappointing bets on a –A$2.1 billion result and delivering the largest monthly shortfall on record (since at least 1971). Meanwhile, retail sales growth unexpectedly stalled over the same period, yielding the worst performance in 11 months.

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Asia Session

GMTCCYEVENTACTEXPPREV
22:45NZDValue of All Buildings SA (QoQ) (1Q)1.0%1.0%-2.1%
01:30AUDTrade Balance (A$) (APR)-3888M-2100M-1231M
01:30AUDRetail Sales (MoM) (APR)0.0%0.3%0.2%

European Session

GMTCCYEVENTEXPPREVIMPACT
07:30EURMarkit Germany Construction PMI (MAY)-51.0Low
08:00GBPNew Car Registrations (YoY) (MAY)-5.1%Low
08:10EURMarkit Germany Retail PMI (MAY)-52.6Medium
08:10EURMarkit Eurozone Retail PMI (MAY)-49.5Medium
08:10EURMarkit France Retail PMI (MAY)-46.2Low
08:10EURMarkit Italy Retail PMI (MAY)-49.0Low
11:00GBPBOE Asset Purchase Target (JUN)£375B£375BHigh
11:00GBPBank of England Bank Rate (JUN 4)0.50%0.50%High

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3
EURUSD1.08031.10081.11411.12131.13461.14181.1623
GBPUSD1.50741.51981.52691.53221.53931.54461.5570

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

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

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