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US Dollar May End Win Streak on Soft ISM Data

US Dollar May End Win Streak on Soft ISM Data

2017-04-03 08:17:00
Ilya Spivak, Head Strategist, APAC
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Talking Points:

  • British Pound may overlook pickup in manufacturing PMI survey
  • US Dollar may end win streak as soft ISM cools Fed rate hike bets
  • Aussie Dollar slumps on retail sales miss, Kiwi Dollar also lower

The UK manufacturing PMI survey headlines the economic calendar in European trading hours. A pickup in the pace of factory-sector activity growth is projected. The outcome seems unlikely to have a lasting impact on the British Pound however considering its limited implications for near-term BOE policy trends. The central bank seems locked in wait-and-see mode as Brexit negotiations begin in earnest.

Later in the day, the analogous US ISM manufacturing figure will enter the spotlight. In this case, a slowdown projected. Recent price action suggests that – after months of almost singular focus on the “Trump trade” – the US Dollar is becoming responsive to fundamental data flow once again. With that in mind, a soft print may put the brakes on the greenback’s four-session winning streak, at least in the near term.

The New Zealand Dollar declined as US Treasury bond yields rose in Asian trade. The move in rates may have reflected firming Fed rate hike expectations. That may have put a spotlight on the ebbing appeal of non-USD alternatives in the G10 FX space, with the Kiwi suffering the lion’s share of selling pressure as the highest-yielding currency of the bunch.

The Australian Dollar suffered after data showed that retail sales unexpectedly fell 0.1 percent in February, disappointing forecasts calling for a 0.3 percent increase. An 8.3 percent surge in building approvals may have compounded selling pressure on bets that swelling supply will cool the bubbling housing market, allowing the RBA room to cut interest rates.

What do retail traders buy/sell decisions hint about FX market trends? Find out here!

Asia Session

US Dollar May End Win Streak on Soft ISM Data

European Session

US Dollar May End Win Streak on Soft ISM Data

** All times listed in GMT. See the full DailyFX economic calendar here.

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

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