US Dollar May Rise as Payrolls Data Boosts Fed Rate Hike Bets

2015-08-07 07:21:00

Talking Points:

US Dollar May Rise as Upbeat Jobs Data Boosts Fed Tightening Outlook
Australian Dollar Gains as RBA Policy Statement Weighs on Rate Cut Bets
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A relatively lackluster economic data docket in European trading hours is likely to see investors looking ahead to July’s US Employment report. An increase of 225,000 in nonfarm payrolls is expected. The unemployment rate is seen holding at 5.3 percent, matching a seven-year low recorded in June.

US economic news-flow has increasingly outperformed relative to expectations since mid-May. That suggests analysts’ models are underestimating the vigor of recovery from the first-quarter downswing, opening the door for an upside surprise.

Such a result is likely to cement bets on a rate increase at the Fed’s September meeting, boosting the US Dollar at the expense of most of its top counterparts. The onset of risk aversion triggered by the prospect of US tightening even as the Eurozone and China remain sluggish, threatening global growth at large, may see outsized losses for commodity-bloc currencies but boost the Japanese Yen.

The Australian Dollar outperformed in overnight trade, rising as much as 0.5 percent on average against its leading counterparts. The move tracked a parallel move higher in front-end bond yields, pointing to ebbing RBA rate hike bets as the drive behind the move.

The improvement in investors’ outlook followed the release of the central bank’s monthly Statement on Monetary Policy. Officials upgraded their inflation outlook and argued that February and May rate cuts still working through into the broad economy, undermining the case for further easing.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
23:30	AUD	AiG Perf of Construction Index (JUL)	47.1	-	46.4
23:50	JPY	Official Reserve Assets (JUL)	$1242.3B	-	$1242.9B
1:30	AUD	RBA Statement on Monetary Policy	-	-	-
1:30	AUD	Home Loans (MoM) (JUN)	4.4%	5.0%	-7.3%
1:30	AUD	Investment Lending (JUN)	-0.7%	-	-3.5%
1:30	AUD	Owner-Occupier Loan Value (MoM) (JUN)	5.5%	-	-7.1%
3:18	JPY	BOJ Annual Rise in Monetary Base	¥80T	¥80T	¥80T

European Session

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
5:45	CHF	Unemployment Rate (JUL)	3.1% (A)	3.1%	Medium
5:45	CHF	Unemployment Rate SA (JUL)	3.3% (A)	3.3%	Medium
6:00	EUR	German Industrial Production (MoM) (JUN)	-1.4% (A)	0.2%	Medium
6:00	EUR	German Industrial Production (YoY) (JUN)	0.6% (A)	2.4%	Medium
6:00	EUR	German Trade Balance (JUN)	24.0B (A)	19.5B	Medium
6:00	EUR	German Current Account Balance (JUN)	24.4B (A)	11.1B	Medium
6:00	EUR	German Exports SA (MoM) (JUN)	-1.0% (A)	1.6%	Medium
6:00	EUR	German Imports SA (MoM) (JUN)	-0.5% (A)	0.7%	Medium
6:45	EUR	France Budget Balance YTD (JUN)	-	-63.9B	Low
6:45	EUR	France Trade Balance (JUN)	-3634M	-4020M	Low
6:45	EUR	France Industrial Production (MoM) (JUN)	-0.1% (A)	0.4%	Low
6:45	EUR	France Industrial Production (YoY) (JUN)	0.6% (A)	2.5%	Low
6:45	EUR	France Mfg Production (MoM) (JUN)	-0.7% (A)	0.7%	Low
6:45	EUR	France Mfg Production (YoY) (JUN)	0.1% (A)	3.0%	Low
7:00	CHF	Foreign Currency Reserves (JUL)	531.8B (A)	516.0B	Low
8:30	GBP	Visible Trade Balance (GBP/Mn) (JUN)	-£9300	-£8000	Medium
8:30	GBP	Trade Balance Non-EU (GBP/Mn) (JUN)	-£2400	-£1570	Medium
8:30	GBP	Trade Balance (GBP/Mn) (JUN)	-£1700	-£393	Medium