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US Dollar May Rise as 2Q GDP Data Boosts Fed Rate Speculation

US Dollar May Rise as 2Q GDP Data Boosts Fed Rate Speculation

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • Euro Unlikely to Find Follow-Through in German CPI, Unemployment Data
  • US Dollar May Rise as Upbeat 2Q GDP Report Amplifies Fed Rate Hike Bets
  • See Economic Releases Directly on Your Charts with the DailyFX News App

The preliminary set of July’s German CPI figures headlines the economic calendar in European trading hours. The benchmark year-on-year inflation rate is expected print at 0.3 percent, unchanged from the prior month. German Unemployment figures are likewise on tap, with the ranks of the jobless expected to shrink by a further 5k.

On balance, neither release is likely to inspire meaningful follow-through from the Euro considering their limited implications for near-term ECB monetary policy. Indeed, the central bank appears effectively on auto-pilot as it continues to implement its €60 billion/month QE effort through September 2016.

Later in the day, the spotlight will shift to second-quarter US GDP report. An increase of 2.5 percent is expected, marking a swift rebound following the 0.2 percent contraction in the first three months of the year. US economic data has increasingly outperformed relative to consensus forecasts recently, opening the door for an upside surprise. Such a result stands to reinforce bets on an on-coming Fed interest rate hike following yesterday’s hawkish shift in FOMC rhetoric, boosting the US Dollar.

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Asia Session

GMTCCYEVENTACTEXPPREV
22:45NZDBuilding Permits (MoM) (JUN)-4.1%-0.0%
23:50JPYIndustrial Production (MoM) (JUN P)0.8%0.3%-2.1%
23:50JPYIndustrial Production (YoY) (JUN P)2.0%1.3%-3.9%
01:30AUDImport price index (QoQ) (2Q)1.4%1.5%-0.2%
01:30AUDExport price index (QoQ) (2Q)-4.4%-4.0%-0.8%
01:30AUDBuilding Approvals (MoM) (JUN)-8.2%-1.0%2.3%
01:30AUDBuilding Approvals (YoY) (JUN)8.6%19.5%18.3%
03:00JPYVehicle Production (YoY) (JUN)-5.3%--16.6%

European Session

GMTCCYEVENTEXPPREVIMPACT
07:00CHFKOF Leading Indicator (JUL)90.489.7Low
07:55EURGerman Unemployment Change (JUL)-5.0K-1.0KMedium
07:55EURGerman Unemployment Claims Rate SA (JUL)6.4%6.4%Medium
08:00EURECB Publishes Economic Bulletin --Low
09:00EUREurozone Economic Confidence (JUL)103.2103.5Low
09:00EUREurozone Business Climate Indicator (JUL)0.190.14Low
09:00EUREurozone Industrial Confidence (JUL)-3.4-3.4Low
09:00EUREurozone Services Confidence (JUL)8.07.9Low
09:00EUREurozone Consumer Confidence (JUL F)-7.1-7.1Low
12:00EURGerman CPI (MoM) (JUL P)0.2%-0.1%Medium
12:00EURGerman CPI (YoY) (JUL P)0.3%0.3%Medium
12:00EURGerman CPI - EU Harmonized (MoM) (JUL P)0.3%-0.2%Medium
12:00EURGerman CPI - EU Harmonized (YoY) (JUL P)0.1%0.1%Medium

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3
EURUSD1.07781.08951.09391.10121.10561.11291.1246
GBPUSD1.54231.55251.55631.56271.56651.57291.5831

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

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