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US Dollar May Rise as Retail Sales Data Fuels Fed Rate Hike Bets

US Dollar May Rise as Retail Sales Data Fuels Fed Rate Hike Bets

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • US Dollar May Rise if Upbeat Retail Sales Report Boosts Fed Rate Hike Bets
  • Yen Corrects Lower After Surge, NZ Dollar Sinks as RBNZ Delivers Rate Cut
  • See Economic Releases Directly on Your Charts with the DailyFX News App

A lull in high-profile scheduled event risk on the European front is likely to see investors looking ahead to May’s US Retail Sales report for direction cues. Receipts are expected to rise 1.2 percent, marking the largest gain in 14 months.

US economic news-flow has increasingly firmed relative to consensus forecasts since mid-May, opening the door for an upside surprise. Such a result may fuel bets on a sooner Fed interest rate hike, boosting the US Dollar. As it stands, futures markets price in the first post-QE increase in the benchmark lending rate in October.

The New Zealand Dollar underperformed in overnight trade, falling as much as 2.7 percent on average against its leading counterparts after the RBNZ issued an unexpected interest rate cut. Graeme Wheeler – the central bank’s Governor – said the move reflected “low inflationary pressures and [an] expected weakening in demand”. He added that policymakers “expect further easing may be appropriate”.

The Japanese Yen turned broadly lower as prices corrected after yesterday’s dramatic rally that delivered the largest daily advance in nearly five months after supportive comments from BOJ Governor Kuroda. We have now entered short GBPJPY.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

21:00

NZD

RBNZ Official Cash Rate (JUN 11)

3.25%

3.50%

3.50%

23:01

GBP

RICS House Price Balance (MAY)

34%

36%

32%

23:27

NZD

REINZ House Sales (YoY) (MAY)

21.6%

-

27.6%

23:50

JPY

BSI Large All Industry (QoQ) (2Q)

-1.2

-

1.9

23:50

JPY

BSI Large Manufacturing (QoQ) (2Q)

-6

-

2.4

01:00

AUD

Consumer Inflation Expectation (JUN)

3.0%

-

3.6%

01:30

AUD

Employment Change (MAY)

42.0K

15.0K

-13.7K

01:30

AUD

Unemployment Rate (MAY)

6.0%

6.2%

6.1%

01:30

AUD

Full Time Employment Change (MAY)

14.7K

-

-23.9K

01:30

AUD

Part Time Employment Change (MAY)

27.3K

-

10.3K

01:30

AUD

Participation Rate (MAY)

64.7%

64.8%

64.7%

02:00

JPY

Tokyo Avg Office Vacancies (MAY)

5.17

-

5.34

05:30

CNY

Industrial Production (YoY) (MAY)

6.1%

6.0%

5.9%

05:30

CNY

Retail Sales (YoY) (MAY)

10.1%

10.1%

10.0%

05:30

CNY

Fixed Assets Ex Rural YTD (YoY) (MAY)

11.4%

11.9%

12.0%

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

No Data

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EURUSD

1.1071

1.1197

1.1261

1.1323

1.1387

1.1449

1.1575

GBPUSD

1.5114

1.5299

1.5415

1.5484

1.5600

1.5669

1.5854

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

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