US Dollar, Major Currencies Look To ISM And Fed-Speak For Direction

By Ilya Spivak, Currency Strategist

Talking Points
  • British Pound May Extend Selloff on Soft Manufacturing PMI Result
  • ISM Data, Fed Commentary in Focus for US Dollar and Risk Appetite
  • Australian Dollar Tumbles as RBA Unexpectedly Cuts Rates by 50bps

Most major European markets are closed for theLabour Day holiday, making for a light economic calendar and thintrading conditions. UK ManufacturingPMI figures round out the docket, with expectationscalling for factory-sector growth to cool in April to reverse theacceleration recorded in the previous month. Monetary policy expectations are in focus for the British Pound , meaning the currency may have scope to extendlosses after recording its first daily decline in two weeksyesterday.

Later in the session, the US ISMManufacturing report enters the spotlight. Forecasts call fora mild slowdown in April that keeps the modest uptrend carved outfrom July of last year intact (a print below 52.6 would be neededto snap the trend, and a 53.0 result is expected). Expectations for QE3 remain central for the US Dollar and risk appetite at large, meaning a softoutcome is likely to be taken as fodder for stimulus hopes andweigh on the greenback. An upside is expected to produce theopposite effect. A busy docket of Fed commentary including regional branch PresidentsKocherlakota, Williams, Evans, Lockhart and Plosser will beevaluated along the same lines.

The AustralianDollar tumbled in otherwise quiet overnight tradeafter the Reserve Bank ofAustralia unexpectedly slashed interest rates by 50 basispoints, bringing the benchmark lending rate to 3.75 percent. RBAGovernor Glenn Stevens noted in the statement accompanying thedecision that global economic growth would likely “c ontinue at a below-trend pace this year,”singling out conditions in Europe as “verydifficult”.

On the domestic front, Stevens said output growth has been “below trend” while “ inflation will probably be lower than earlier expected ” over the coming one to two years, establishing scope for further easing in the months ahead. Markets are now pricing in 125bps in further rate cuts over the coming 12 months according to data compiled by Credit Suisse.

Asia Session : What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

22:45

NZD

Private Wages ex Overtime (QoQ) (1Q)

0.5%

0.5%

0.6% (R-)

22:45

NZD

Average Hourly Earnings (QoQ) (1Q)

1.3%

-

0.0%

22:45

NZD

Labor Cost Private Sector (QoQ) (1Q)

0.5%

0.5%

0.7%

23:30

AUD

AiG Performance of Manufacturing Index (APR)

43.9

-

49.5

0:00

AUD

RPData-Rismark House PX Actual (MAR)

-0.8%

-

0.2%

1:00

CNY

PMI Manufacturing (ARP)

53.3

53.6

53.1

1:30

AUD

House Price Index (YoY) (1Q)

-4.5%

-3.9%

-4.5% (R+)

1:30

AUD

House Price Index (QoQ) (1Q)

-1.1%

-0.5%

-0.7% (R+)

4:30

AUD

Reserve Bank of Australia Rate Decision

3.75%

4.00%

4.25%

5:00

JPY

Vehicle Sales (YoY) (APR)

92.0%

-

78.2%

6:30

AUD

RBA Commodity Index SDR (YoY) (APR)

-4.2%

-

2.1% (R-)

6:30

AUD

RBA Commodity Price Index (APR)

99.5

-

99.1 (R-)

E uro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

8:30

GBP

PMI Manufacturing (APR)

51.5

52.1

Medium

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.3209

1.3298

GBPUSD

1.6173

1.6283

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

To contact Ilya , e-mail ispivak@dailyfx.com . Follow me on Twitter at @IlyaSpivak

To be added to Ilya 's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2012/05/01/US_Dollar_Major_Currencies_Look_to_ISM_and_Fed-Speak_for_Direction.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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