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US Dollar Snaps Losing Streak, May Extend Gains on ISM Data

US Dollar Snaps Losing Streak, May Extend Gains on ISM Data

Ilya Spivak, Head Strategist, APAC

Talking Points:

  • US Dollar corrected lower overnight after snapping losing streak
  • Mnuchin appointment, OPEC deal, ADP data fueled reflation bets
  • Strong ISM manufacturing survey may boost Fed rate hike outlook

The US Dollar corrected broadly lower in overnight trade after snapping a four-day losing streak yesterday, as expected. The benchmark currency found support the return of “Trump trade” dynamics, an OPEC production cut agreement and upbeat economic data encouraged another swell in Fed rate hike speculation.

The appointment of Steve Mnuchin to Treasury secretary seemed to boost hopes that the seasoned financier will ably implement President-elect Trump’s reflationary policies, upbeat ADP data hinted the economy may be running hotter even before a fiscal boost and the prospect of higher oil prices bolstered price growth bets.

The greenback may continue to recover if November’s ISM manufacturing survey continues the recent run of upbeat US economic news-flow. Economists expect a print at 52.5, putting the pace of factory-sector activity growth at the highest in four months.

UK manufacturing PMI data headlines the economic calendar in European hours. A pickup is expected but the release seems unlikely to be a potent driver for the British Pound considering its limited implications for the near-term trajectory of Bank of England monetary policy.

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Asia Session

GMTCCYEVENTACTEXPPREV
21:45NZDTerms of Trade Index (QoQ) (3Q)-1.8%0.0%-2.5%
22:30AUDAiG Perf of Mfg Index (NOV)54.2-50.9
23:00AUDCoreLogic House Px (MoM) (NOV)0.2%-0.5%
23:00NZDQV House Prices (YoY) (NOV)12.4%-12.7%
23:50JPYCapital Spending (YoY) (3Q)-1.3%-0.4%3.1%
23:50JPYCapital Spending Ex Software (3Q)-1.4%-0.6%3.1%
23:50JPYCompany Profits (3Q)11.5%--10.0%
23:50JPYCompany Sales (3Q)-1.5%--3.5%
0:30JPYNikkei Japan PMI Mfg (NOV F)51.3-51.1
0:30AUDPrivate Capital Expenditure (3Q)-4.0%-3.0%-5.2%
1:00CNYMfg PMI (NOV)51.75151.2
1:00CNYNon-Mfg PMI (NOV)54.7-54
1:45CNYCaixin China PMI Mfg (NOV)50.95151.2
5:00JPYVehicle Sales (YoY) (NOV)13.9%-0.8%

European Session

GMTCCYEVENTEXP/ACTPREVIMPACT
7:00GBPNationwide House Px (MoM) (NOV)0.1% (A)0.0%Medium
7:00GBPNationwide House Px NSA (YoY) (NOV)4.4% (A)4.6%Medium
8:15CHFRetail Sales Real (YoY) (OCT)-0.5% (A)-2.1%Low
8:30CHFPMI Mfg (NOV)56.6 (A)54.7Medium
8:45EURMarkit/ADACI Italy Mfg PMI (NOV)52.2 (A)50.9Low
8:50EURMarkit France Mfg PMI (NOV F)51.7 (A)51.5Low
8:55EURMarkit/BME Germany Mfg PMI (NOV F)54.3 (A)54.4Medium
9:00EURMarkit Eurozone Mfg PMI (NOV F)53.7 (A)53.7Medium
9:30GBPMarkit UK PMI Mfg SA (NOV)54.454.3High
10:00EUREurozone Unemployment Rate (OCT)-10.0%Medium
10:00EURItaly GDP WDA (QoQ) (3Q F)-0.3%Low
10:00EURItaly GDP WDA (YoY) (3Q F)-0.9%Low

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3
EUR/USD1.03751.04891.05391.06031.06531.07171.0831
GBP/USD1.22771.2381.24431.24831.25461.25861.2689

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

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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