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US Dollar May Rise as Fed-Speak Fuels Rate Hike Speculation

US Dollar May Rise as Fed-Speak Fuels Rate Hike Speculation

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • US Dollar may advance as Fed-speak stokes rate hike speculation
  • Pound gains after Hammond argues for City of London status quo
  • Yen correcting higher after yesterday’s broad-based down move

A relatively uneventful European data docket shifts the spotlight to comments from Boston and Dallas Fed Presidents Eric Rosengren and Robert Kaplan in the final hour of the trading week. Traders are almost certainly eager to onboard the last bits of guidance before the two-week blackout period ahead of this month’s FOMC meeting. Hawkish posturing in line with recent remarks from other US central bank officials may boost rate hike speculation, sending the US Dollar higher.

The Japanese Yen outperformed in overnight trade, trading broadly higher in a move that appeared to be corrective after the currency lagged its major counterparts in the prior session. The British Pound continued to recover from selling pressure that plagued the UK unit through most of yesterday’s European session. Losses appeared to accelerate in the run-up to testimony from Chancellor Philip Hammond before the House of Lords Economic Affairs Committee.

Concerns about the post-Brexit future of the City of London as regional financial hub seemed to be front and center for investors. Sterling bottomed and began to recover as Hammond spoke, possibly reflecting the government’s apparent commitment to defend the status quo. The Chancellor said the City supports the real economy across Europe and breaking it up – including the splitting up of clearing services – would be a mistake for the EU.

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

22:45

NZD

Card Spending Retail (MoM) (AUG)

-0.4%

0.3%

0.2%

22:45

NZD

Card Spending Total (MoM) (AUG)

-0.8%

-

0.3%

23:50

JPY

Money Stock M2 (YoY) (AUG)

3.3%

3.3%

3.4%

23:50

JPY

Money Stock M3 (YoY) (AUG)

2.8%

2.9%

2.9%

1:30

CNY

CPI (YoY) (AUG)

1.3%

1.7%

1.8%

1:30

CNY

PPI (YoY) (AUG)

-0.8%

-0.9%

-1.7%

1:30

AUD

Home Loans (MoM) (JUL)

-4.2%

-1.5%

1.7%

1:30

AUD

Investment Lending (JUL)

0.5%

-

3.3%

1:30

AUD

Owner-Occupier Loan Value (MoM) (JUL)

-3.1%

-

1.6%

4:30

JPY

Tertiary Industry Index (MoM) (JUL)

0.4%

0.8%

European Session

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

5:45

CHF

Unemployment Rate (AUG)

3.2% (A)

3.1%

Medium

5:45

CHF

Unemployment Rate SA (AUG)

3.4% (A)

3.3%

Medium

6:00

EUR

German Trade Balance (JUL)

19.5b (A)

24.7b

Medium

6:00

EUR

German Current Account Balance (JUL)

18.6b (A)

26.3b

Medium

6:00

EUR

German Exports SA (MoM) (JUL)

-2.6% (A)

0.2%

Low

6:00

EUR

German Imports SA (MoM) (JUL)

-0.7% (A)

1.1%

Low

8:30

GBP

Visible Trade Balance (£/Mn) (JUL)

-11650

-12409

Medium

8:30

GBP

Trade Balance Non EU (£/Mn) (JUL)

-3600

-4159

Low

8:30

GBP

Trade Balance (£/Mn) (JUL)

-4200

-5084

Low

8:30

GBP

Construction Output (MoM) (JUL)

-0.5%

-0.9%

Low

8:30

GBP

Construction Output (YoY) (JUL)

-3.4%

-2.2%

Low

8:30

GBP

BoE/TNS Inflation Next 12 Mths (AUG)

-

2.0%

Low

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.1162

1.1204

1.1222

1.1246

1.1264

1.1288

1.1330

GBP/USD

1.3123

1.3245

1.3293

1.3367

1.3415

1.3489

1.3611

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

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