US Dollar Looks to Services ISM to Guide Fed Rate Hike Speculation

2016-09-06 06:23:00 Ilya Spivak

Talking Points:

Euro may be more response to Retail PMIs vs. 2Q GDP revision
US Dollar looks to services ISM to shape Fed rate hike outlook
Aussie Dollar little-changed after status-quo RBA rate decision

The final revision of second-quarter Eurozone GDP figures as well as Augusts’ Retail PMI roundup for the single currency area headline the economic calendar in European trading hours. The former reading may pass with little fanfare because the data mostly covers the period preceding the UK “Brexit” referendum. The latter set of figures may help show if uncertainty following the vote is cooling activity on the Continent.

News-flow out of the region has rapidly deteriorated relative to consensus forecasts over the past three weeks, opening the door for a downside surprise. That may weigh on the Euro as traders speculate that the ECB will have to make good on the pledge to boost stimulus in the near term as conditions deteriorate. An upbeat result will probably fall on deaf ears however considering the central bank’s overtly dovish posture.

Later in the day, the spotlight will turn to Augusts’ ISM Non-Manufacturing Composite survey. Expectations suggest service-sector activity growth slowed for a second consecutive month. A soft result in line with a string of disappointing outcomes over the past two months may pour cold water on Fed rate hike speculation, sending the US Dollar lower. Needless to say, an upside surprise may boost the greenback.

The Yen traded lower as risk appetite firmed in overnight trade, undermining support for the anti-risk currency. Indeed, prices intraday price swings mirrored Japan’s benchmark Nikkei 225 stock index. The Australian Dollar rose alongside front-end bond yields ahead of the RBA rate decision, seemingly reflecting bets on a status-quo result. Prices were little-changed when the central bank delivered as expected.

Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
22:00	NZD	ANZ Truckometer Heavy (MoM) (AUG)	6.7%	-	-5.3%
23:01	GBP	BRC Sales Like-For-Like (YoY) (AUG)	-0.9%	1.4%	1.1%
23:30	AUD	ANZ Roy Morgan Weekly Consumer Conf	114.3	-	118.4
0:00	NZD	QV House Prices (YoY) (AUG)	14.6%	-	14.1%
1:30	AUD	Net Exports of GDP (2Q)	-0.2	0	1.1
1:30	AUD	BoP Current Account Balance (2Q)	-15.5b	-20.0b	-14.9b
4:30	AUD	RBA Cash Rate Target	1.50%	1.50%	1.50%

European Session

GMT		EVENT	EXP/ACT	PREV	IMPACT
5:45	CHF	GDP (QoQ) (2Q)	0.6% (A)	0.3%	Medium
5:45	CHF	GDP (YoY) (2Q)	2.0% (A)	1.1%	Medium
6:00	EUR	Germany Factory Orders (MoM) (JUL)	0.2% (A)	-0.3%	Medium
6:00	EUR	Germany Factory Orders (YoY) (JUL)	-0.7% (A)	-3.0%	Medium
7:15	CHF	CPI (MoM) (AUG)	-0.1%	-0.4%	Medium
7:15	CHF	CPI (YoY) (AUG)	-0.1%	-0.2%	Medium
7:15	CHF	CPI - EU Harmonized (MoM) (AUG)	-0.1%	-0.1%	Low
7:15	CHF	CPI - EU Harmonized (YoY) (AUG)	0.0%	-0.5%	Low
7:30	EUR	Markit Germany Construction PMI (AUG)	-	51.6	Medium
8:10	EUR	Markit Germany Retail PMI (AUG)	-	52.0	Medium
8:10	EUR	Markit Eurozone Retail PMI (AUG)	-	48.9	Medium
8:10	EUR	Markit France Retail PMI (AUG)	-	51.6	Low
8:10	EUR	Markit Italy Retail PMI (AUG)	-	40.3	Low
9:00	EUR	Eurozone GDP SA (QoQ) (2Q F)	0.3%	0.3%	Medium
9:00	EUR	Eurozone GDP SA (YoY) (2Q F)	1.6%	1.6%	Medium
9:00	EUR	Eurozone Gross Fix Cap (QoQ) (2Q)	-0.1%	0.8%	Low
9:00	EUR	Eurozone Govt Expend (QoQ) (2Q)	0.2%	0.4%	Low
9:00	EUR	Eurozone Household Cons (QoQ) (2Q)	0.3%	0.6%	Low
9:40	GBP	BOE ILTR Operation Results	-	-	Low
13:50	GBP	BOE Bond-Buying Operation Results	-	-	Low