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British Pound May Rise on UK PMI After Friday Selloff

British Pound May Rise on UK PMI After Friday Selloff

Ilya Spivak,

Talking Points:

  • Yen gains, commodity bloc currencies fall amid risk aversion in FX space
  • Aussie Dollar underperforms as soft Retail Sales data hurts RBA outlook
  • British Pound may rebound on Construction PMI data after Friday selloff

The sentiment-sensitive commodity bloc currencies weakened and the safety-linked Japanese Yen traded higher as risk appetite soured in overnight trade. Interestingly, the moves appeared to be ignored by the equities space, with Asian bourses relatively little-changed by around midday in Tokyo and Sydney. Crude oil fell alongside S&P 500 futures as well as gold prices however, hinting the overall landscape may reflect pre-positioning for this week’s release of minutes from the March FOMC meeting.

The Australian Dollar underperformed following a disappointing Retail Sales report. Receipts registered flat in February, falling short of expectations calling for a 0.4 percent increase. The year-on-year growth rate dropped to 3.3 percent, the lowest since September 2013. The currency tracked downward parallel to a drop in Australian front-end bond yields, suggesting the report inspired RBA rate cut bets. Easing is not expected at this week’s policy meeting however.

Looking ahead, a relatively quiet economic calendar is headlined by UK Construction PMI figures. Broadly speaking, UK economic news-flow has improved relative to consensus forecasts over the past two months, opening the door for an upside surprise. Such a result may help encourage a recovery from the British Pound after the currency broadly slumped on Friday. That move may have reflected flows linked to portfolio adjustment for “Brexit” referendum risk at the start of the new fiscal year and the new quarter.

What do DailyFX analysts expect from markets in the second quarter? Find out here !

Asia Session

23:50JPYMonetary Base (YoY) (MAR)28.5%-29.0%
23:50JPYMonetary Base End of period (¥) (MAR)375.7t-358.8t
01:00AUDMelbourne Institute Inflation (MoM) (MAR)0.0%--0.2%
01:00AUDMelbourne Institute Inflation (YoY) (MAR)1.7%-2.1%
01:30AUDRetail Sales (MoM) (FEB)0.0%0.4%0.3%
01:30AUDANZ Job Advertisements (MoM) (MAR)0.2%--1.2%
01:30AUDBuilding Approvals (MoM) (FEB)3.1%2.5%-6.6%
01:30AUDBuilding Approvals (YoY) (FEB)-9.0%-9.1%-14.5%

European Session

07:00CHFTotal Sight Deposits (APR 1)-483.3bLow
07:00CHFDomestic Sight Deposits (APR 1)-419.6bLow
08:30GBPMarkit/CIPS UK Construction PMI (MAR)54.154.2Medium
08:30EURSentix Investor Confidence (APR)7.05.5Low
08:30EURECB's Praet Speaks at in Rome --Low
09:00EUREurozone PPI (MoM) (FEB)-0.5%-1.0%Low
09:00EUREurozone PPI (YoY) (FEB)-4.0%-2.9%Low
09:00EUREurozone Unemployment Rate (FEB)10.3%10.3%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.