Talking Points:
- US Dollar, Japanese Yen outperform amid market-wide risk aversion
- Australian Dollar weakest link among embattled commodity bloc FX
- S&P 500 futures hint risk-off mood set to prevail into the week-end
Risk aversion has gripped financial markets in the final hours of the trading week. The US Dollar is enjoying broad-based support from haven demand and the anti-risk Japanese Yen is likewise on the upswing. The sentiment-linked commodity bloc currencies bore the brunt of selling pressure, sinking alongside stock prices, with the Australian Dollar standing out as the weakest of the bunch.
A singular catalyst for the move does not prominently stand out, although ominous comments from ONS Chief Economist Joe Grice may have played a part in setting the tone. The head of the UK’s statistics office warned that it is too early to draw definitive conclusions about the health of the economy in the aftermath of the Brexit referendum, pouring cold water on optimism driven by a recent run of upbeat news-flow.
A relatively quiet economic calendar from here presents few barriers for established momentum to carry forward, pointing to a risk-off mood ahead. S&P 500 futures are pointing sharply lower, bolstering the case for follow-through. Volumes are noticeably thin however, lowering barriers to seesaw volatility.
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Asia Session
| GMT | CCY | EVENT | ACT | EXP | PREV |
|---|---|---|---|---|---|
| 22:45 | NZD | Net Migration SA (JUL) | 5600 | - | 5670 |
| 00:00 | USD | Fed's Kaplan to Speak in Dallas | - | - | - |
| 03:00 | NZD | Credit Card Spending (MoM) (JUL) | 2.3% | - | -0.9% |
| 03:00 | NZD | Credit Card Spending (YoY) (JUL) | 5.6% | - | 4.1% |
| 04:30 | JPY | All Industry Activity Index (MoM) (JUN) | 1.0% | 0.9% | -1.3% |
| 05:30 | JPY | Nationwide Dept Sales (YoY) (JUL) | -0.1% | - | -3.5% |
| 05:30 | JPY | Tokyo Dept Store Sales (YoY) (JUL) | 0.6% | - | -3.2% |
European Session
| GMT | CCY | EVENT | EXP/ACT | PREV | IMPACT |
|---|---|---|---|---|---|
| 06:00 | EUR | German PPI (MoM) (JUL) | 0.2% (A) | 0.4% | Medium |
| 06:00 | EUR | German PPI (YoY) (JUL) | -2.0% (A) | -2.2% | Medium |
| 08:30 | GBP | Public Finances (PSNCR) (JUL) | -2.1b (A) | 13.5b | Low |
| 08:30 | GBP | Central Government NCR (JUL) | 3.6b (A) | 20.0b | Low |
| 08:30 | GBP | Public Sector Net Borrowing (JUL) | -1.5b (A) | 7.5b | Low |
| 08:30 | GBP | PSNB ex Banking Groups (JUL) | -1.0b (A) | 8.0b | Low |
Critical Levels
| CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
|---|---|---|---|---|---|---|---|
| EURUSD | 1.1175 | 1.1255 | 1.1305 | 1.1335 | 1.1385 | 1.1415 | 1.1495 |
| GBPUSD | 1.2854 | 1.2990 | 1.3079 | 1.3126 | 1.3215 | 1.3262 | 1.3398 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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