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US Dollar Looks to Fed’s Fischer for Fuel to Resume Advance

US Dollar Looks to Fed’s Fischer for Fuel to Resume Advance

Ilya Spivak,

Talking Points:

  • US Dollar resumes advance as Treasury yields rebound after pullback
  • Comments from Fed’s Fischer to guide on-coming rate hike speculation
  • Euro unlikely to find lasting directional cues in flash German CPI data

The US Dollar edged higher in otherwise quiet overnight trade as front-end bond yields rebounded following yesterday’s pullback. In turn, that move appeared corrective in the wake of the strong up-shift in Fed rate hike bets after Fed Chair Janet Yellen delivered a hawkish-sounding speech at the Jackson Hole Symposium on Friday. The central bank head said “the case for an increase in the federal funds rate has strengthened in recent months”.

Fed commentaryremains in focus in the hours ahead as Vice Chair Stanley Fischer speaks with Bloomberg TV. Fischer’s interview with CNBC after Yellen’s speech seemed to shape the markets’ hawkish interpretation of her remarks. Asked whether markets ought to take seriously the probability of a hike in September and more than one rate increase in 2016, Fischer said Yellen’s comments meant the answer on both counts is “yes”.

The greenback is likely to resume Friday’s advance if Fischer opts do double down on hawkish rhetoric. Alternatively, an attempt to soften his previous comments having had the benefit of seeing the markets’ response may weigh on the US unit. Either way however, follow-through may be limited as traders wait for the upcoming release of Augusts’ jobs data to see if policymakers’ saber-rattling finds support in concrete evidence.

The preliminary set of Augusts’ German CPI figures headlines the economic calendar in European trading hours. The headline year-on-year inflation rate is expected to rise to 0.5 percent. The Euro is unlikely to pay much heed to the outcome considering its limited implications for near-term ECB monetary policy trends. The central bank’s firmly dovish posture suggests an uptick is all but moot for now. Prices may be a bit more response to a downside surprise that bolsters recent commentary hinting at stimulus expansion.

What do retail traders’ buy and sell decisions hint about on-coming price trends? Find out here !

Asia Session

22:45NZDBuilding Permits (MoM) (JUL)-10.5%-21.9%
23:30AUDWeekly Consumer Confidence Index (AUG 28)118.4-121.8
23:30JPYJobless Rate (JUL)3.0%3.1%3.1%
23:30JPYJob-To-Applicant Ratio (JUL)1.371.381.37
23:30JPYOverall Household Spending (YoY) (JUL)-0.5%-1.5%-2.3%
23:50JPYRetail Trade (YoY) (JUL)-0.2%-0.9%-1.3%
23:50JPYRetail Sales (MoM) (JUL)1.4%0.8%0.3%
23:50JPYDept. Store, Supermarket Sales (JUL)0.6%0.9%-1.5%
01:30AUDBuilding Approvals (MoM) (JUL)11.3%1.1%-2.9%
01:30AUDBuilding Approvals (YoY) (JUL)3.1%-8.3%-5.9%

European Session

06:00EURGerman Import Price Index (MoM) (JUL)-0.1%0.5%Low
06:00EURGerman Import Price Index (YoY) (JUL)-4.0%-4.6%Low
07:00CHFKOF Leading Indicator (AUG)102.0102.7Medium
08:30GBPNet Consumer Credit (JUL)1.7b1.8bMedium
08:30GBPNet Lending Sec. on Dwellings (JUL)3.1b3.3bLow
08:30GBPMortgage Approvals (JUL)61.9k64.8kMedium
08:30GBPMoney Supply M4 (MoM) (JUL)-1.1%Low
08:30GBPM4 Money Supply (YoY) (JUL)-3.5%Low
08:30GBPM4 Ex IOFCs 3M Annualised (JUL)7.1%8.0%Low
09:00EUREurozone Economic Confidence (AUG)104.1104.6Low
09:00EUREurozone Business Climate Indicator (AUG)0.360.39Low
09:00EUREurozone Industrial Confidence (AUG)-2.7-2.4Low
09:00EUREurozone Services Confidence (AUG)11.111.1Low
09:00EUREurozone Consumer Confidence (AUG F)-8.5-8.5Medium
09:40GBPBOE ILTR Operation Results --Medium
10:30USDFed's Fischer Speaks on Bloomberg Television --High
12:00EURGerman CPI (MoM) (AUG P)0.1%0.3%High
12:00EURGerman CPI (YoY) (AUG P)0.5%0.4%High

Critical Levels

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

--- Written by Ilya Spivak, Currency Strategist for

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