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US Dollar May Rise Amid Pre-Positioning for Yellen Speech

US Dollar May Rise Amid Pre-Positioning for Yellen Speech

Talking Points:

  • US Dollar seesaws upward amid pre-positioning for Yellen speech
  • NZ Dollar down as disappointing trade data weighs on RBNZ bets
  • Euro may not find lasting momentum in 2Q German GDP revision

The US Dollar corrected higher in overnight trade having traded broadly lower in the prior session. Seesaw price action since the beginning of the week seems to reflect pre-positioning ahead of a much-anticipated speech from Fed Chair Janet Yellen at the Jackson Hole Symposium on Friday.

A shift in priced-in policy bets implied in Fed Funds futures hints investors are leaning toward a hawkish outcome, hinting the greenback may find fuel for greater gains as the end of the week draws closer. The probability of a rate hike in December now stands at 53.9 percent compared 51 percent last week and 45.1 percent a month ago.

The New Zealand Dollar narrowly underperformed. The currency edged lower alongside front-end bond yields, hinting at a modest up-shift in RBNZ rate cut bets as the catalyst behind the decline. The move appeared to follow a disappointing Trade Balance report. The 12-month year-to-date deficit registered at –NZ$3.03 million versus –NZ$2.9 million expected.

Looking ahead, a revised set of second-quarter German GDP figures headlines an otherwise quiet European data docket. The release is expected to confirm the Eurozone’s largest economy added 0.4 percent in the three months through June. The figures will not capture the cooling effect of the “Brexit” referendum outcome and so seem unlikely to generate a lasting reaction from the Euro.

Asia Session

22:45NZDTrade Balance (JUL)-433m-325m110m
22:45NZDExports (JUL)3.96b4.07b4.25b
22:45NZDImports (JUL)4.40b4.45b4.14b
22:45NZDTrade Balance 12 Mth YTD (JUL)-3034m-2900m-3331m
01:00AUDSkilled Vacancies MoM (JUL)-0.6%-0.8%
01:30AUDConstruction Work Done (2Q)-3.7%-2.0%-2.6%
05:00JPYLeading Index CI (JUN F)--98.4
05:00JPYCoincident Index (JUN F)--110.5

European Session

06:00EURGerman Private Consumption (QoQ) (2Q)0.2%0.4%Low
06:00EURGerman Government Spending (QoQ) (2Q)0.5%0.5%Low
06:00EURGerman Capital Investment (QoQ) (2Q)-1.3%1.8%Low
06:00EURGerman Construction Investment (QoQ) (2Q)-2.8%2.3%Low
06:00EURGerman Domestic Demand (QoQ) (2Q)-0.1%0.8%Low
06:00EURGerman Exports (QoQ) (2Q)0.7%1.0%Low
06:00EURGerman Imports (QoQ) (2Q)-0.3%1.4%Low
06:00EURGerman GDP s.a. (QoQ) (2Q F) 0.4%0.4%Medium
06:00EURGerman GDP w.d.a. (YoY) (2Q F) 1.8%1.8%Medium
06:00EURGerman GDP n.s.a. (YoY) (2Q F) 3.1%3.1%Medium
08:30GBPBBA Loans for House Purchase (JUL)3800040103Low

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.