TALKING POINTS – PMI, EURO, ECB, US DOLLAR, GDP, YEN
- Euro may look past PMI data downtick as ECB rate decision looms
- US Dollar might shrug off softer PMIs before rosy 2Q GDP report
- Japanese Yen may turn lower as market-wide risk appetite recovers
Eurozone PMI data headlines the calendar in European trading hours. It is expected to show that the pace of manufacturing- and service-sector activity growth slowed in July. Regional news-flow has tended to disappoint relative to forecasts in recent months, opening the door for a deeper downturn than projected. That might mean relatively little for the Euro however as traders look ahead to the ECB rate decision.
Later in the day, the analogous set of US PMI surveys is due to cross the wires. Signs of deceleration are expected here as well, but traders may overlook them too so long as they don’t veer too far from the averages persisting through the second quarter. Data due Friday is expected to show those are consistent with an annualized growth rate of 4.2 percent, the highest in four years.
On balance, sentiment trends may emerge as the most potent catalyst once again. FTSE 100 and S&P 500 futures are pointing convincingly higher ahead of the opening bells in London and New York, hinting that a risk-on mood is set to prevail. Weakness in the perennially anti-risk Japanese Yen might be the most straight-forward implication of such an outcome.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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