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British Pound, US Dollar Seek Direction in Manufacturing Surveys

British Pound, US Dollar Seek Direction in Manufacturing Surveys

Talking Points:

  • British Pound may rebound on short-covering if PMI tops forecasts
  • US Dollar looks to ISM data to boost Fed interest rate hike outlook
  • Aussie Dollar erases post-China PMI drop on neutral RBA rhetoric

February’s UK Manufacturing PMI survey headline the economic calendar in European trading hours. A slowdown in the pace of factory-sector growth is expected, with the headline index ticking down to 52.3 from 52.9 in the prior month.

UK news-flow increasingly outperformed relative to consensus forecasts over the past month, suggests analysts are underestimating the economy’s strength and opening the door for an upside surprise. This may encourage covering of net-short British Pound exposure build up in recent months, sending prices higher.

The spotlight then turns to US ISM Manufacturing data, expected to show the pace of contraction accelerated in February (48.5 vs. 48.2 in January). A better-than-expected print in line with recent outperformance on US data may stoke Fed rate hike bets, boosting the US Dollar.

The Australian Dollar erased overnight losses after another neutral RBA monetary policy announcement. While no change in rates was expected, traders were speculating that a recent deterioration in economic metrics would spur a dovish shift in rhetoric, paving the way for easing in the months ahead.

Governor Glenn Stevens and company opted for the status quo however, judging the current setting policy as appropriate to deliver continued growth with inflation close to target. The door for easing was left open however, with Stevens saying that low inflation offers scope for rate cuts should that be appropriate.

The Aussie was on the defensive ahead of the RBA announcement after a disappointing set of Chinese PMI figures. The data set showed the manufacturing sector contracted at the fastest pace since November 2011 while services growth hit the weakest since the Great Recession trough in 2008.

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Asia Session

21:45NZDTerms of Trade Index (QoQ) (4Q)-2.0%0.0%-3.8%
22:30AUDAiG Perf of Mfg Index (FEB)53.5-51.5
22:30AUDWeekly Consumer Confidence Index (FEB 28)111.3-114.3
23:00AUDCoreLogic RP Data House Px (MoM) (FEB)0.5%-0.9%
23:30JPYJobless Rate (JAN)3.2%3.3%3.3%
23:30JPYJob-To-Applicant Ratio (JAN)
23:30JPYOverall Household Spending (YoY) (JAN)-3.1%-2.7%-4.4%
23:50JPYCapital Spending (YoY) (4Q)8.5%8.7%11.2%
23:50JPYCapital Spending Ex Software (4Q)8.9%8.7%11.2%
23:50JPYCompany Profits (4Q)-1.7%-9.0%
23:50JPYCompany Sales (4Q)-2.7%-0.1%
00:30AUDNet Exports of GDP (4Q)
00:30AUDBoP Current Account Balance (4Q)-21.1B-20.0B-18.8B
00:30AUDBuilding Approvals (MoM) (JAN)-7.5%-3.0%8.6%
00:30AUDBuilding Approvals (YoY) (JAN)-15.5%-8.5%-3.3%
01:00CNYManufacturing PMI (FEB)49.049.449.4
01:00CNYNon-manufacturing PMI (FEB)52.7-53.5
01:45CNYCaixin China PMI Mfg (FEB)48.048.448.4
02:00JPYNikkei Japan PMI Mfg (FEB F)50.1-50.2
03:30AUDRBA Cash Rate Target (MAR 1)2.00%2.00%2.00%
05:00JPYVehicle Sales (YoY) (FEB)-4.6%-0.2%
05:30AUDCommodity Index (AUD) (FEB)73.2-72.7
05:30AUDCommodity Index (YoY) (FEB)-21.6%--24.8%

European Session

08:15CHFRetail Sales Real (YoY) (JAN)--1.6%Low
08:30CHFPMI Manufacturing (FEB)49.650.0Low
08:45EURMarkit/ADACI Italy Manufacturing PMI (FEB)52.353.2Low
08:50EURMarkit France Manufacturing PMI (FEB F)50.350.3Low
08:55EURGerman Unemployment Change (000's) (FEB)-10k-20kMedium
08:55EURGerman Unemployment Claims Rate SA (FEB)6.2%6.2%Medium
08:55EURMarkit/BME Germany Manufacturing PMI (FEB F)50.250.2Medium
09:00EURMarkit Eurozone Manufacturing PMI (FEB F)51.051.0Medium
09:30GBPMarkit UK PMI Manufacturing SA (FEB)52.352.9High
10:00EUREurozone Unemployment Rate (JAN)10.4%10.4%Medium
10:00EURItalian GDP Annual (YoY) (2015)0.6%-0.4%Low

Critical Levels

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

--- Written by Ilya Spivak, Currency Strategist for

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.