US Dollar Backtracks as FOMC Rate Decision Looms Ahead
- US Dollar Drops Amid Pre-Positioning Before FOMC Policy Announcement
- Euro Unlikely to Find Lasting Direction Cues in German IFO Survey Data
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The US Dollar underperformed in overnight trade as front-end yields declined, hinting weakness may reflect pre-positioning ahead of this week’s much-anticipated FOMC policy meeting. Traders may be paring back exposure in favor of a more neutral posture until after event risk passes having rebuilt bets on a 2015 rate hike over the past two weeks (as reflected in the December Fed Funds futures contract).
July’s German IFO survey of business confidence headlines the economic calendar in European trading hours. The headline Business Climate gauge is expected to edge narrowly lower, marking the third consecutive month of deterioration. The release seems unlikely to have a significant impact on the Euro however considering its limited implications for near-term ECB monetary policy, which appears to be on auto-pilot for the time being.
Later in the day, US Durable Goods orders data enters the spotlight. An increase of 3.2 percent is being penciled in for June, which would amount to the strongest uptick in three months. US economic news-flow has increasingly outperformed relative to consensus forecasts over recent weeks, opening the door for an upside surprise. Follow-through may prove constrained however, with traders unwilling to firmly commit to a directional bias until after the FOMC announcement is behind them.
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|23:50||JPY||PPI Services (YoY) (JUN)||0.4%||0.6%||0.6%|
|01:30||CNY||Industrial Profits (YoY) (JUN)||-0.3%||-||0.6%|
|06:00||EUR||German Import Price Index (MoM) (JUN)||-0.5% (A)||-0.2%||Low|
|06:00||EUR||German Import Price Index (YoY) (JUN)||-1.4% (A)||-0.8%||Low|
|07:00||CHF||Total Sight Deposits (JUL 24)||-||460.86B||Low|
|07:00||CHF||Domestic Sight Deposits (JUL 24)||-||396.75B||Low|
|08:00||EUR||German IFO Business Climate (JUL)||107.2||107.4||Medium|
|08:00||EUR||German IFO Current Assessment (JUL)||112.9||113.1||Medium|
|08:00||EUR||German IFO Expectations (JUL)||101.8||102.0||Medium|
|08:00||EUR||Eurozone M3 Money Supply (YoY) (JUN)||5.1%||5.0%||Medium|
|08:00||EUR||Eurozone M3 3-month average (JUN)||5.1%||5.0%||Medium|
|10:00||GBP||CBI Trends Total Orders (JUL)||-6||-7||Low|
|10:00||GBP||CBI Trends Selling Prices (JUL)||-8||-7||Low|
|10:00||GBP||CBI Business Optimism (JUL)||1||3||Low|
|CCY||Supp 3||Supp 2||Supp 1||Pivot Point||Res 1||Res 2||Res 3|
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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