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Pound at Risk on UK GDP Revision, US Dollar May Rise on Fed-Speak

Pound at Risk on UK GDP Revision, US Dollar May Rise on Fed-Speak

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • British Pound Seems to be Biased Downward on Final 2Q UK GDP Figures
  • US Dollar May Rise if Fed Commentary Bolsters 2015 Rate Hike Probability
  • See Economic Releases Directly on Your Charts with the DailyFX News App

The sentiment-geared Australian and New Zealand Dollars outperformed while the safety-linked Japanese Yen faced selling pressure as risk appetite recovered in overnight trade. The MSCI Asia Pacific regional benchmark stock index rose 2.3 percent. The move looked to be corrective after the index plunged 2.9 percent yesterday, producing the largest daily drawdown in a month and hitting the weakest level in almost three years.

Stock index futures tracking top European and US bourses are pointing sharply higher ahead in late Asian hours, hinting risk-on dynamics are likely to carry on for now. A revised set of second-quarter UK GDP figures is in focus on the data front. Economists expect the flash estimate showing a 0.7 percent quarter-on-quarter increase to be confirmed.

A print in line with expectations would cement a pickup from the 0.4 percent output increase recorded in the first quarter. Initial reports of the modest acceleration failed to stem the drop in BOE rate hike expectations against a backdrop of market tumult in recent weeks and their confirmation seems unlikely to be much more helpful. On the other hand, a downgrade in line with the recent tendency to underperform on UK economic news-flow would help validate the dovish shift in investors’ outlook, weighing on the British Pound.

Elsewhere on the docket, September’s preliminary Eurozone CPI figures seem unlikely to generate any more attention than yesterday’s analogous report from Germany. The core year-on-year inflation rate is expected to remain unchanged at 0.9 percent. The Euro may overlook the release absent a major deviation from consensus forecasts considering the results’ limited implications for near-term ECB monetary policy. Central bank officials have stressed it will not consider changing the existing stimulus mix until its December sit-down.

Later in the day, “Fed-speak will enter into the spotlight once again. Comments from Chair Janet Yellen, St. Louis Fed President James Bullard and Governor Lael Brainard are due to cross the wires. While markets have already heard from Ms Yellen and Mr Bullard in the aftermath of September’s FOMC meetings, Ms Brainard’s views remain somewhat mysterious. This ought to make her remarks of particular interest for investors. If she joints the chorus of policymakers arguing for a 2015 rate hike – a group that seems encompass most FOMC voters (with the exception of Charles Evans) – the US Dollar may advance.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

21:45

NZD

Building Permits (MoM) (AUG)

-4.9%

-

20.3%

23:05

GBP

GfK Consumer Confidence (SEP)

3

5

7

23:50

JPY

Industrial Production (MoM) (AUG P)

-0.5%

1.0%

-0.8%

23:50

JPY

Industrial Production (YoY) (AUG P)

0.2%

1.8%

0.0%

23:50

JPY

Retail Trade (YoY) (AUG)

0.8%

1.2%

1.8%

23:50

JPY

Retail Sales (MoM) (AUG)

0.0%

0.5%

1.4%

23:50

JPY

Large Retailers' Sales (AUG)

1.8%

1.3%

2.1%

00:00

NZD

ANZ Activity Outlook (SEP)

16.7

-

12.2

00:00

NZD

ANZ Business Confidence (SEP)

-18.9

-

-29.1

01:30

AUD

Private Sector Credit (MoM) (AUG)

0.6%

0.5%

0.6%

01:30

AUD

Private Sector Credit (YoY) (AUG)

6.3%

6.2%

6.1%

01:30

AUD

Building Approvals (MoM) (AUG)

-6.9%

-2.0%

7.9%

01:30

AUD

Building Approvals (YoY) (AUG)

5.1%

7.4%

17.9%

01:45

CNY

Westpac-MNI Consumer Sentiment (SEP)

118.2

-

116.5

02:00

NZD

Money Supply M3 (YoY) (AUG)

9.0%

-

9.3%

04:00

JPY

Vehicle Production (YoY) (AUG)

-4.7%

-

-5.9%

05:00

JPY

Housing Starts (YoY) (AUG)

8.8%

7.6%

7.4%

05:00

JPY

Annualized Housing Starts (AUG)

0.931M

0.920M

0.914M

05:00

JPY

Construction Orders (YoY) (AUG)

-15.6%

-

-4.0%

European Session

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

06:00

GBP

Nationwide House Px (MoM) (SEP)

0.5% (A)

0.4%

Medium

06:00

GBP

Nationwide House Px (YoY) (SEP)

3.8% (A)

3.2%

Medium

06:00

CHF

UBS Consumption Indicator (AUG)

1.63 (A)

1.59

Low

06:00

EUR

German Retail Sales (MoM) (AUG)

-0.4% (A)

1.6%

Low

06:00

EUR

German Retail Sales (YoY) (AUG)

2.5% (A)

3.8%

Low

07:00

CHF

KOF Leading Indicator (SEP)

101.0

100.7

Low

07:55

EUR

German Unemployment Change (SEP)

-5k

-7k

Medium

07:55

EUR

German Unemployment Rate (SEP)

6.4%

6.4%

Medium

08:00

EUR

Italian Unemployment Rate (AUG P)

12.0%

12.0%

Low

08:30

GBP

Current Account Balance (2Q)

-22.0b

-26.5b

Low

08:30

GBP

GDP (QoQ) (2Q F)

0.7%

0.7%

High

08:30

GBP

GDP (YoY) (2Q F)

2.6%

2.6%

High

08:30

GBP

Total Business Investment (QoQ) (2Q F)

2.9%

2.9%

Low

08:30

GBP

Total Business Investment (YoY) (2Q F)

-

5.0%

Low

08:30

GBP

Index of Services (MoM) (Jul)

0.2%

0.5%

Low

08:30

GBP

Index of Services 3M/3M (Jul)

0.8%

0.7%

Low

08:30

GBP

Lloyds Business Barometer (SEP)

-

45

Low

09:00

EUR

Eurozone Unemployment Rate (AUG)

10.9%

10.9%

Medium

09:00

EUR

Eurozone CPI Estimate (YoY) (SEP)

0.0%

0.1%

High

09:00

EUR

Eurozone CPI Core (YoY) (SEP A)

0.9%

0.9%

High

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EURUSD

1.1067

1.1154

1.1202

1.1241

1.1289

1.1328

1.1415

GBPUSD

1.5010

1.5086

1.5118

1.5162

1.5194

1.5238

1.5314

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

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