Talking Points:
- US Dollar on the defensive as Asia reacts to Augusts’ nonfarm payrolls data
- Follow-through on USD weakness may be lacking as Fed hike bets resurface
- British Pound may rise as final round of PMIs cools BOE easing speculation
The US Dollar traded broadly lower against its major counterparts at the start of the trading week, with Asian markets seemingly playing catch-up following Friday’s US jobs report. The data revealed that the economy added 151k jobs in August compared with 180k expected by economists.
The outcome initially sank US yields and the greenback as traders took the miss as a negative for Fed rate hike prospects. Benchmark borrowing costs and greenback would swiftly recover however, perhaps because the payrolls print nudged the three-month trend average above the 190k level cited by Fed Chair Yellen as supportive of tightening. With that in mind, USD weakness may struggle to find lasting follow-through.
Augusts’ UK Services and Composite PMI readings headline the European data docket. Upside surprises on analogous manufacturing- and construction-sector readings proved supportive for the British Pound last week and more of the same could be on tap this time around. Indeed, a Citi gauge measuring the behavior of UK economic news-flow relative to consensus forecasts is now pointing to the strongest outperformance in three years.
Losing money trading in the FX market? This might be why.
Asia Session
| GMT | CCY | EVENT | ACT | EXP | PREV |
|---|---|---|---|---|---|
| 23:30 | AUD | AiG Perf of Services Index (AUG) | 45.0 | - | 53.9 |
| 00:00 | JPY | Labor Cash Earnings (YoY) (JUL) | 1.4% | 0.4% | 1.4% |
| 00:00 | JPY | Real Cash Earnings (YoY) (JUL) | 2.0% | 0.7% | 2.0% |
| 00:30 | JPY | Nikkei Japan PMI Services (AUG) | 49.6 | - | 50.4 |
| 00:30 | JPY | Nikkei Japan PMI Composite (AUG) | 49.8 | - | 50.1 |
| 01:00 | AUD | Melbourne Institute Inflation (MoM) (AUG) | 0.2% | - | -0.3% |
| 01:00 | AUD | Melbourne Institute Inflation (YoY) (AUG) | 1.2% | - | 1.0% |
| 01:00 | NZD | ANZ Commodity Price (AUG) | 3.2% | - | 2.1% |
| 01:30 | AUD | ANZ Job Advertisements (MoM) (AUG) | 1.8% | - | -0.8% |
| 01:30 | AUD | Inventories SA (QoQ) (2Q) | 0.3% | 0.3% | -0.4% |
| 01:30 | AUD | Company Operating Profit (QoQ) (2Q) | 6.9% | 2.0% | -4.4% |
| 01:45 | CNY | Caixin China PMI Services (AUG) | 52.1 | - | 51.7 |
| 01:45 | CNY | Caixin China PMI Composite (AUG) | 51.8 | - | 51.9 |
| 02:30 | JPY | Kuroda Speaks at a Kyodo News event | - | - | - |
European Session
| GMT | CCY | EVENT | EXP | PREV | IMPACT | |
|---|---|---|---|---|---|---|
| 07:45 | EUR | Markit/ADACI Italy Services PMI (AUG) | 51.8 | 52.0 | Low | |
| 07:45 | EUR | Markit/ADACI Italy Composite PMI (AUG) | 52.0 | 52.2 | Low | |
| 07:50 | EUR | Markit France Services PMI (AUG F) | 52.0 | 52.0 | Low | |
| 07:50 | EUR | Markit France Composite PMI (AUG F) | 51.6 | 51.6 | Low | |
| 07:55 | EUR | Markit Germany Services PMI (AUG F) | 53.3 | 53.3 | Medium | |
| 07:55 | EUR | Markit/BME Germany Composite PMI (AUG F) | 54.4 | 54.4 | Medium | |
| 08:00 | CHF | Total Sight Deposits (SEP 2) | - | 515.6b | Low | |
| 08:00 | CHF | Domestic Sight Deposits (SEP 2) | - | 438.1b | Low | |
| 08:00 | EUR | Markit Eurozone Services PMI (AUG F) | 53.1 | 53.1 | Medium | |
| 08:00 | EUR | Markit Eurozone Composite PMI (AUG F) | 53.3 | 53.3 | Medium | |
| 08:30 | GBP | Official Reserves Changes (AUG) | - | $219m | Low | |
| 08:30 | GBP | Markit/CIPS UK Services PMI (AUG) | 50.0 | 47.4 | High | |
| 08:30 | GBP | Markit/CIPS UK Composite PMI (AUG) | 50.8 | 47.5 | High | |
| 08:30 | EUR | Eurozone Sentix Investor Confidence (SEP) | 5.0 | 4.2 | Low | |
| 09:00 | EUR | Eurozone Retail Sales (MoM) (JUL) | 0.5% | 0.0% | Medium | |
| 09:00 | EUR | Eurozone Retail Sales (YoY) (JUL) | 1.8% | 1.6% | Medium | |
| 13:50 | GBP | Bank of England Bond-Buying Operation Results | - | - | Medium |
Critical Levels
| CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
|---|---|---|---|---|---|---|---|
| EUR/USD | 1.0984 | 1.1085 | 1.1121 | 1.1186 | 1.1222 | 1.1287 | 1.1388 |
| GBP/USD | 1.3102 | 1.3201 | 1.3247 | 1.3300 | 1.3346 | 1.3399 | 1.3498 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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