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Forex pairs in this Article » EUR/USD, AUD/USD, NZD/USD
The Euro aims to extend recent gains as July’s flash PMI roundup hints at moderation in the manufacturing and services sectors, bolstering the ECB policy outlook.

Talking Points

  • Euro May Rise as Improved PMI Readings Boost ECB Policy Outlook
  • US Dollar May Fall Further if New Home Sales Data Underperforms
  • Australian, NZ Dollars Sink as Chinese PMI Data Proves Disappointing
The preliminary set of July’s Eurozone PMI figures headlines the economic calendar in European trading hours. Expectations point to moderation, with the region-wide index expected to show manufacturing- and service-sector activity shrank at the slowest pace since March 2012. News-flow from the currency bloc has increasingly outperformed relative to consensus forecasts (according to data compiled by Citigroup), which seems to have been at least somewhat supportive for ECB policy expectations. Meanwhile, the Euro continues to track closely with the front-end yield spread, suggesting another upside surprise this time around may underpin the rates outlook as help the single currency extend gains.

Later in the day, the spotlight shifts back to the US docket. June’s New Home Sales report is in focus, where a print at 484,000 is projected to yield the highest reading since June 2008. As we’ve noted previously however, US economic outcomes have returned somewhat lackluster results on the whole compared with economists’ outlook. This keeps the door open for disappointing results that undercut speculation about a near-term move to “taper” Federal Reserve stimulus efforts and compound downward pressure on the US Dollar.

The greenback corrected higher against its major counterparts in overnight trade, adding as much as 0.2 percent on average. The Australian and New Zealand Dollars bore the brunt of the selloff, sliding as much as 0.6 percent each against their US namesake. The slump followed a disappointing Chinese Manufacturing PMI result from HSBC. The index unexpectedly dropped to 47.7, showing activity in the factory sector contracted at the fastest rate in 13 months.

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Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

22:45

NZD

Trade Balance (NZ$) (JUN)

414M

105M

39M

22:45

NZD

Exports (NZ$) (JUN)

4.02B

4.01B

4.08B

22:45

NZD

Imports (NZ$) (JUN)

3.60B

3.90B

4.04B

22:45

NZD

Trade Balance YTD (NZ$) (JUN)

-777M

-1050M

-902M

23:50

JPY

Merchandise Trade Balance Total (¥)(JUN)

-180.8B

-155.7B

-996.4B

23:50

JPY

Adjusted Merchandise Trade Balance (¥) (JUN)

-598.7B

-594.7B

-777.9B

23:50

JPY

Merchandise Trade Exports (YoY) (JUN)

7.4%

10.0%

10.1%

23:50

JPY

Merchandise Trade Imports (YoY) (JUN)

11.8%

13.8%

10.1%

1:00

AUD

DEWR Internet Skilled Vacancies (MoM) (JUN)

-1.8%

-

-1.8%

1:30

AUD

CPI (QoQ) (2Q)

0.4%

0.5%

0.4%

1:30

AUD

CPI (YoY) (2Q)

2.4%

2.5%

2.5%

1:30

AUD

CPI RBA Weighted Median (QoQ) (2Q)

0.7%

0.5%

0.5%

1:30

AUD

CPI RBA Weighted Median (YoY) (2Q)

2.6%

2.4%

2.5%

1:30

AUD

CPI RBA Trimmed Mean (QoQ) (2Q)

0.5%

0.5%

0.4%

1:30

AUD

CPI RBA Trimmed Mean (YoY) (2Q)

2.2%

2.1%

2.3%

1:45

CNY

HSBC Flash Manufacturing PMI (JUL)

47.7

48.2

48.2

Euro Session:

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

7:00

EUR

French PMI Manufacturing (JUL P)

48.8

48.4

Medium

7:00

EUR

French PMI Services (JUL P)

47.5

47.2

Medium

7:30

EUR

German PMI Manufacturing (JUL A)

49.2

48.6

High

7:30

EUR

German PMI Services (JUL A)

50.7

50.4

High

8:00

EUR

Euro-Zone PMI Manufacturing (JUL A)

49.1

48.8

High

8:00

EUR

Euro-Zone PMI Services (JUL A)

48.7

48.3

High

8:00

EUR

Euro-Zone PMI Composite (JUL A)

49.1

48.7

High

10:00

GBP

CBI Trends Total Orders (JUL)

-12

-18

Low

10:00

GBP

CBI Trends Selling Prices (JUL)

4

3

Low

10:00

GBP

CBI Business Optimism (JUL)

8

5

Low

Critical Levels:

CCY

SUPPORT

RESISTANCE

EURUSD

1.3134

1.3253

GBPUSD

1.5333

1.5398

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

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

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