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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

GMT

CCY

EVENT

ACT

EXP

PREV

22:45

NZD

Building Permits (MoM) (JUL)

-10.5%

-

21.9%

23:30

AUD

Weekly Consumer Confidence Index (AUG 28)

118.4

-

121.8

23:30

JPY

Jobless Rate (JUL)

3.0%

3.1%

3.1%

23:30

JPY

Job-To-Applicant Ratio (JUL)

1.37

1.38

1.37

23:30

JPY

Overall Household Spending (YoY) (JUL)

-0.5%

-1.5%

-2.3%

23:50

JPY

Retail Trade (YoY) (JUL)

-0.2%

-0.9%

-1.3%

23:50

JPY

Retail Sales (MoM) (JUL)

1.4%

0.8%

0.3%

23:50

JPY

Dept. Store, Supermarket Sales (JUL)

0.6%

0.9%

-1.5%

01:30

AUD

Building Approvals (MoM) (JUL)

11.3%

1.1%

-2.9%

01:30

AUD

Building Approvals (YoY) (JUL)

3.1%

-8.3%

-5.9%

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

06:00

EUR

German Import Price Index (MoM) (JUL)

-0.1%

0.5%

Low

06:00

EUR

German Import Price Index (YoY) (JUL)

-4.0%

-4.6%

Low

07:00

CHF

KOF Leading Indicator (AUG)

102.0

102.7

Medium

08:30

GBP

Net Consumer Credit (JUL)

1.7b

1.8b

Medium

08:30

GBP

Net Lending Sec. on Dwellings (JUL)

3.1b

3.3b

Low

08:30

GBP

Mortgage Approvals (JUL)

61.9k

64.8k

Medium

08:30

GBP

Money Supply M4 (MoM) (JUL)

-

1.1%

Low

08:30

GBP

M4 Money Supply (YoY) (JUL)

-

3.5%

Low

08:30

GBP

M4 Ex IOFCs 3M Annualised (JUL)

7.1%

8.0%

Low

09:00

EUR

Eurozone Economic Confidence (AUG)

104.1

104.6

Low

09:00

EUR

Eurozone Business Climate Indicator (AUG)

0.36

0.39

Low

09:00

EUR

Eurozone Industrial Confidence (AUG)

-2.7

-2.4

Low

09:00

EUR

Eurozone Services Confidence (AUG)

11.1

11.1

Low

09:00

EUR

Eurozone Consumer Confidence (AUG F)

-8.5

-8.5

Medium

09:40

GBP

BOE ILTR Operation Results

-

-

Medium

10:30

USD

Fed's Fischer Speaks on Bloomberg Television

-

-

High

12:00

EUR

German CPI (MoM) (AUG P)

0.1%

0.3%

High

12:00

EUR

German CPI (YoY) (AUG P)

0.5%

0.4%

High

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.1085

1.1135

1.1162

1.1185

1.1212

1.1235

1.1285

GBP/USD

1.2889

1.3001

1.3053

1.3113

1.3165

1.3225

1.3337

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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