News Column

Forex: Euro, Kiwi Dollar May Correct Higher to Close the Trading Week

May 8, 2014

Ilya Spivak

Talking Points:



  • Australian Dollar Soft on Dovish RBA, Profit-Taking in Asian Trade
  • Quiet European Data Docket Unlikely to Drive FX Market Volatility
  • Euro, Franc and Kiwi Dollar May Rise on Corrective Profit-Taking



    The Australian Dollar underperformed in otherwise quiet overnight trade. The currency began the session in corrective having scored impressive gains yesterday following better-than-expected employment figures. The decline was amplified by the release of a dovish-sounding RBA Monetary Policy Statement. The central bank lowered its GDP and inflation forecasts and poured cold water on interest rate hike bets, saying accommodative policy is likely to be appropriate "for some time".



    The economic calendar is relatively quiet in European trading hours. UK Industrial Production figures are expected to show output fell for the first time in four months in March but the outcome is unlikely to mean much for the British Pound beyond reinforcing the amply priced-in standstill on the BOE policy front. Meanwhile, the German Trade Balance report will probably pass with little fanfare as traders' top concern remains the possibility of ECB intervention following yesterday's ominous policy announcement.



    The US data docket is likewise thin, opening the door for a consolidative tone into the final hours of the trading week. That may produce a round of corrective profit-taking as markets digest the latest burst of volatility. The Aussie and the Japanese Yen may find themselves on the defensive in such a scenario, while the previously beleaguered Euro, Swiss Franc and New Zealand Dollar squeeze out a bit of upside momentum.









    Asia Session



    GMT

    CCY

    EVENT

    ACT

    EXP

    PREV

    22:45

    NZD

    Card Spending Retail (MoM) (APR)

    0.3%

    0.6%

    0.0%

    22:45

    NZD

    Card Spending Total (MoM) (APR)

    -0.4%

    -

    -0.2%

    23:50

    JPY

    Official Reserve Assets (APR)

    $1282.8B

    -

    $1279.3B

    1:30

    CNY

    PPI (YoY) (APR)

    -2.0%

    -1.9%

    -2.3%

    1:30

    CNY

    CPI (YoY) (APR)

    1.8%

    2.1%

    2.4%

    1:30

    AUD

    RBA Statement on Monetary Policy

    -

    -

    -

    5:00

    JPY

    Leading Index (MAR P)



    106.7

    108.9

    5:00

    JPY

    Coincident Index (MAR P)



    114.0

    113.0





    European Session



    GMT

    CCY

    EVENT

    EXP

    PREV

    IMPACT

    6:00

    EUR

    German Trade Balance (E) (MAR)

    17.4B

    16.3B

    Medium

    6:00

    EUR

    German Current Account (E) (MAR)

    14.9B

    13.9B

    Medium

    6:00

    EUR

    German Exports s.a. (MoM) (MAR)

    1.3%

    -1.4%

    Low

    6:00

    EUR

    German Imports s.a. (MoM) (MAR)

    0.6%

    0.4%

    Low

    8:30

    GBP

    Manufacturing Production (MoM) (MAR)

    0.3%

    1.0%

    Medium

    8:30

    GBP

    Manufacturing Production (YoY) (MAR)

    2.9%

    3.8%

    Medium

    8:30

    GBP

    Industrial Production (MoM) (MAR)

    -0.2%

    0.9%

    Medium

    8:30

    GBP

    Industrial Production (YoY) (MAR)

    2.4%

    2.7%

    Medium

    8:30

    GBP

    Construction Output s.a. (MoM) (MAR)

    0.6%

    -2.8%

    Low

    8:30

    GBP

    Construction Output s.a. (YoY) (MAR)

    7.1%

    2.8%

    Low

    8:30

    GBP

    Visible Trade Balance () (MAR)

    -9000M

    -9094M

    Low

    8:30

    GBP

    Trade Balance - Non EU () (MAR)

    -3000M

    -2919M

    Low

    8:30

    GBP

    Total Trade Balance () (MAR)

    -2000M

    -2058M

    Low





    Critical Levels



    CCY

    Supp 3

    Supp 2

    Supp 1

    Pivot Point

    Res 1

    Res 2

    Res 3

    EUR/USD

    1.3569

    1.3729

    1.3784

    1.3889

    1.3944

    1.4049

    1.4209

    GBP/USD

    1.6842

    1.6893

    1.6913

    1.6944

    1.6964

    1.6995

    1.7046














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    Source: DailyFx


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