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US Dollar May Rise as News-Flow Bolsters Fed Policy Outlook

US Dollar May Rise as News-Flow Bolsters Fed Policy Outlook

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • US Dollar May Rise if Upbeat PPI, UofM Figures Boost Fed Rate Hike Bets
  • Australian Dollar Edges Lower Alongside S&P/ASX 200 in Overnight Trade
  • See Economic Releases Directly on Your Charts with the DailyFX News App

Another quiet day on the European economic data front is likely to keep the spotlight on US economic news-flow through the end of the trading week. May’s PPI figures and June’s University of Michigan Consumer Confidence gauge are on tap. Core wholesale inflation is expected to edge narrowly lower to 0.7 year-on-year, marking the weakest reading in almost five years. Meanwhile, the sentiment gauge is seen moving higher to 91.2 after printing a six-month low at 90.7 in May.

Realized US data outcomes havesteadily improved relative to consensus forecasts since mid-May, suggesting analysts are underestimating the vigor of the world’s largest economy and opening the door for upside surprises. Such results may encourage an up-shift in investors’ expected timeline for the first post-QE interest rate hike, boosting the US Dollar. As it stands, priced-in bets reflected in Fed funds futures suggest markets continue to see the onset of tightening in October.

The Australian Dollar declined in otherwise quiet overnight trade. The move tracked a fractional downswing on the S&P/ASX 200 stock index, pointing to ebbing risk appetite as the likely catalyst behind selling pressure. Financial shares led the equities benchmark lower in a move that may have reflected a response to comments from ANZ CFO Shayne Elliot said he expects regulars to ask lenders for higher capital levels. ANZ is Australia’s third-largest bank.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

22:30

NZD

BusinessNZ Manufacturing PMI (MAY)

51.5

-

51.7

22:45

NZD

Food Prices (MoM) (MAY)

0.4%

-

-0.3%

01:30

AUD

Credit Card Purchases (A$) (APR)

22.9B

-

25.6B

01:30

AUD

Credit Card Balances (A$) (APR)

51.1B

-

51.2B

04:30

JPY

Industrial Production (MoM) (APR F)

1.2%

-

1.0%

04:30

JPY

Industrial Production (YoY) (APR F)

0.1%

-

-0.1%

04:30

JPY

Capacity Utilization (MoM) (APR)

-0.4%

-

-1.2%

04:30

JPY

Tertiary Industry Index (MoM) (APR)

-0.2%

0.4%

-1.0%

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

08:30

GBP

Construction Output SA (MoM) (APR)

0.1%

3.9%

Low

08:30

GBP

Construction Output SA (YoY) (APR)

0.5%

1.6%

Low

09:00

EUR

Eurozone Industrial Production (MoM) (APR)

0.4%

-0.3%

Medium

09:00

EUR

Eurozone Industrial Production (YoY) (APR)

1.1%

1.8%

Medium

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EURUSD

1.0959

1.1108

1.1183

1.1257

1.1332

1.1406

1.1555

GBPUSD

1.5267

1.5379

1.5448

1.5491

1.5560

1.5603

1.5715

--- 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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