Pound May Ignore Soft GDP Data, US Dollar Aims Higher on FOMC
- Aussie drops on CPI, Japanese Yen gains on risk-off mood in Asia
- US Dollar may rise amid risk aversion if Fed boosts June hike bets
- British Pound may shrug off soft GDP data as Brexit fears recede
The Australian Dollar underperformed in overnight trade, dropping after disappointing first-quarter CPI data fueled RBA rate cut speculation. The sentiment-linked Canadian and New Zealand Dollars likewise declined while the anti-risk Japanese Yen advanced as risk appetite soured across Asian stock exchanges. The MSCI Asia Pacific regional benchmark equity index lost 0.5 percent. The cautious mood probably reflects pre-positioning ahead of upcoming monetary policy announcement from the Federal Reserve.
The rate-setting FOMC committee is expected to keep the benchmark lending rate unchanged, putting the spotlight on the statement released after the sit-down. Rhetoric suggesting that threats from global headwinds highlighted last month have yet to materialize may be taken to mean tightening is more likely to resume in June, boosting the US Dollar. It may likewise drive risk aversion, encouraging continuation of overnight trading patterns.
UK GDP figures headline the European data docket. The year-on-year growth rate is expected to slow to 2 percent, the weakest in three years. Interestingly, 12-month BOE rate hike expectations have firmed and the British Pound has traded higher even as UK economic data outcomes has deteriorated relative to consensus forecasts in recent weeks.
This apparent mismatch may be accounted for by receding risk of a UK exit from the European Union in the minds of investors. Indeed, mentions of “Brexit” have become less frequent in global news flow tracked by Bloomberg. If the risk premium associated with the June referendum on membership in the regional bloc is truly dissipating, then even soft GDP figures may be unable to inflict lasting pain on the currency.
Are financial markets matching the DailyFX analysts’ expectations? See our forecast here !
|22:45||NZD||Trade Balance (MAR)||117m||401m||367m|
|22:45||NZD||Trade Balance 12 Mth YTD (MAR)||-3838m||-3585m||-3294m|
|23:30||AUD||ANZ Roy Morgan Weekly Consumer Conf||111.7||-||115.8|
|1:30||CNY||Industrial Profits (YoY) (MAR)||0.111||-||-0.047|
|1:30||AUD||CPI (QoQ) (1Q)||-0.2%||0.2%||0.4%|
|1:30||AUD||CPI (YoY) (1Q)||1.3%||1.7%||1.7%|
|1:30||AUD||CPI Weighted Median (QoQ) (1Q)||0.1%||0.5%||0.4%|
|1:30||AUD||CPI Weighted Median (YoY) (1Q)||1.4%||1.9%||1.9%|
|1:30||AUD||CPI Trimmed Mean (QoQ) (1Q)||0.2%||0.5%||0.6%|
|1:30||AUD||CPI Trimmed Mean (YoY) (1Q)||1.7%||2.0%||2.1%|
|1:45||CNY||Westpac-MNI Consumer Sentiment (APR)||117.8||118.1|
|4:30||JPY||All Industry Activity Index (MoM) (FEB)||-1.2%||-1.3%||1.2%|
|5:00||JPY||Small Business Confidence (APR)||47.8||48.5||48.8|
|6:00||EUR||German Import Price Index (MoM) (MAR)||0.7% (A)||-0.6%||Low|
|6:00||EUR||German Import Price Index (YoY) (MAR)||-5.9% (A)||-5.7%||Low|
|6:00||EUR||German GfK Consumer Confidence (MAY)||9.7 (A)||9.4||Low|
|6:00||CHF||UBS Consumption Indicator (MAR)||1.51 (A)||1.45||Low|
|6:45||EUR||French Consumer Confidence (APR)||94 (A)||94||Low|
|8:00||EUR||Eurozone M3 Money Supply (YoY) (MAR)||5.0%||5.0%||Medium|
|8:00||EUR||Italian Consumer Confidence Index (APR)||115.0||114.8||Low|
|8:00||EUR||Italian Business Confidence (APR)||102.5||102.2||Low|
|8:00||EUR||Italian Economic Sentiment (APR)||-||100.1||Low|
|8:30||GBP||GDP (QoQ) (1Q A)||0.4%||0.6%||High|
|8:30||GBP||GDP (YoY) (1Q A)||2.0%||2.1%||High|
|8:30||GBP||Index of Services (MoM) (FEB)||0.2%||0.2%||Low|
|8:30||GBP||Index of Services (3M/3M) (FEB)||0.8%||0.9%||Low|
|10:00||GBP||CBI Retailing Reported Sales (APR)||13||7||Low|
|10:00||GBP||CBI Total Dist. Reported Sales (APR)||-||20||Low|
|CCY||Supp 3||Supp 2||Supp 1||Pivot Point||Res 1||Res 2||Res 3|
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.