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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,

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.


Asia Session

21:45NZDBuilding Permits (MoM) (AUG)-4.9%-20.3%
23:05GBPGfK Consumer Confidence (SEP)357
23:50JPYIndustrial Production (MoM) (AUG P) -0.5%1.0%-0.8%
23:50JPYIndustrial Production (YoY) (AUG P) 0.2%1.8%0.0%
23:50JPYRetail Trade (YoY) (AUG)0.8%1.2%1.8%
23:50JPYRetail Sales (MoM) (AUG)0.0%0.5%1.4%
23:50JPYLarge Retailers' Sales (AUG)1.8%1.3%2.1%
00:00NZDANZ Activity Outlook (SEP)16.7-12.2
00:00NZDANZ Business Confidence (SEP)-18.9--29.1
01:30AUDPrivate Sector Credit (MoM) (AUG)0.6%0.5%0.6%
01:30AUDPrivate Sector Credit (YoY) (AUG)6.3%6.2%6.1%
01:30AUDBuilding Approvals (MoM) (AUG)-6.9%-2.0%7.9%
01:30AUDBuilding Approvals (YoY) (AUG)5.1%7.4%17.9%
01:45CNYWestpac-MNI Consumer Sentiment (SEP)118.2-116.5
02:00NZDMoney Supply M3 (YoY) (AUG)9.0%-9.3%
04:00JPYVehicle Production (YoY) (AUG)-4.7%--5.9%
05:00JPYHousing Starts (YoY) (AUG)8.8%7.6%7.4%
05:00JPYAnnualized Housing Starts (AUG)0.931M0.920M0.914M
05:00JPYConstruction Orders (YoY) (AUG)-15.6%--4.0%

European Session

06:00GBPNationwide House Px (MoM) (SEP)0.5% (A)0.4%Medium
06:00GBPNationwide House Px (YoY) (SEP)3.8% (A)3.2%Medium
06:00CHFUBS Consumption Indicator (AUG)1.63 (A)1.59Low
06:00EURGerman Retail Sales (MoM) (AUG)-0.4% (A)1.6%Low
06:00EURGerman Retail Sales (YoY) (AUG)2.5% (A)3.8%Low
07:00CHFKOF Leading Indicator (SEP)101.0100.7Low
07:55EURGerman Unemployment Change (SEP)-5k-7kMedium
07:55EURGerman Unemployment Rate (SEP)6.4%6.4%Medium
08:00EURItalian Unemployment Rate (AUG P) 12.0%12.0%Low
08:30GBPCurrent Account Balance (2Q)-22.0b-26.5bLow
08:30GBPGDP (QoQ) (2Q F) 0.7%0.7%High
08:30GBPGDP (YoY) (2Q F) 2.6%2.6%High
08:30GBPTotal Business Investment (QoQ) (2Q F) 2.9%2.9%Low
08:30GBPTotal Business Investment (YoY) (2Q F) -5.0%Low
08:30GBPIndex of Services (MoM) (Jul)0.2%0.5%Low
08:30GBPIndex of Services 3M/3M (Jul)0.8%0.7%Low
08:30GBPLloyds Business Barometer (SEP)-45Low
09:00EUREurozone Unemployment Rate (AUG)10.9%10.9%Medium
09:00EUREurozone CPI Estimate (YoY) (SEP)0.0%0.1%High
09:00EUREurozone CPI Core (YoY) (SEP A) 0.9%0.9%High

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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