Euro: Investor Sentiment Surveys a First Step Into Heavier Event Surf

By DailyFx | Updated August 12, 2014 AAA

DailyFX.com -

Talking Points:

  • Dollar Inches Higher Without Help From Fed’s Fischer
  • Euro: Investor Sentiment Surveys a First Step Into Heavier Event Surf
  • British Pound and UK Yields Rise on Data Improvement

Dollar Inches Higher Without Help From Fed’s Fischer

The Dow Jones FXCM Dollar Index (ticker = USDollar) inched higher Monday. Though officially notching a fresh four-month high for the index, there is little conviction to the move. A fundamental driver is needed to stage the next leg of the bull’s month-long run, but neither docket nor financial seas have been very accommodating. For the currency’s high limit safe haven appeal, we see a further moderation of the spurt of fear suffered the past two weeks as technical levels for the likes of the S&P 500, High-Yield markets and Carry Trades hold at the same time volume moderates. Where rate speculation could have developed out of the first round of Vice Chair Fischer’s commentary, he kept it vague.

Euro: Investor Sentiment Surveys a First Step Into Heavier Event Surf

The Euro opened the week lower against the majors – but there was little conviction to the selling. Fears over the region’s financial stability moderated with hefty gains from European equity indexes. Meanwhile, there was a contrast in sovereign bond performance with the ‘core’ seeing yields rise (demand slide) while the ‘periphery’ experienced a drop in their own yields. Looking at the docket moving forward, data will start to play a heavier roll in speculation. The upcoming session offers up the ZEW’s investor sentiment measures for Germany and the Eurozone. As useful as this may seem, the indicators are not especially known as market movers. From Greece’s 2Q GDP on Wednesday or the mix of periphery and core growth readings on Thursday, we can expect more rate speculation stirred.

British Pound and UK Yields Rise on Data Improvement

The UK economic docket was light to start the weekend, but a market on edge about interest rate speculation was more than willing to translate the economic updates into price action for the sterling. On the Calendar Monday, Bloomberg’s survey of economic forecasts showed a tick higher in the pace of expansion out through 2015. Meanwhile, an employment sentiment survey from Lloyds rose to a series high. Growth and inflation read like the ingredients for a rate hike and speculators are more than open to that call – especially after the heart pound retracement over the past month. Gilt yields and UK swap rates were up alongside the pound, but don’t expect this trend to gain a lot of traction just yet. With the all-important BoE Quarterly Inflation Report (QIR) due Wednesday, traders will be on edge.

Yen Crosses In Breakout Patterns but Can 2Q GDP Supply the Move?

Having marked a serious turn in the past month, it seems that the Yen crosses’ implied (expected) volatility measures are cooling. The short-term (1-week) expected activity gauge for USDJPY has retreated back below 5 percent to start the week as the pair has held its position above 102 – there is a distinct inverse relationship between volatility levels and the direction of USDJPY, much like the S&P 500 and VIX. Ahead, we have a high profile Japanese indicator set for release: 2Q Japanese GDP figures. This is no doubt an important update, but that doesn’t make it a definitive market-mover. An improvement from this data is unlikely to single-handedly drive global investor sentiment higher – and thereby the yen crosses – higher. To reverse the BoJ’s hands-off approach to further QQE, a substantial miss would be needed.

Canadian and Aussie Dollar Rallies, New Zealand Dollar Dives on Housing Data

Housing data was the name of the game for the Comm Bloc Monday. The particular sector is of particular interest in Canada, Australia and New Zealand where loose monetary policy contributed to distortion in demand and prices for homes. Each country released data on the sector to different outcomes. Canada posted the most impressive performance Monday when July housing starts offered a modest beat of expectations with 200,100 starts on an annual basis reported. The loonie rose between 0.4 and 0.7 percent – against the GBP and EUR respectively. Housing prices in Australia through 2Q would also beat – 1.8 percent growth – but the rate hike pressure didn’t seem to gain the same kind of traction. For New Zealand this morning, the pain continued. A 13 percent drop in sales has led to a market-wide tumble for the Kiwi.

Emerging Markets Rebound Sharply as Russia-Ukraine Fears Ebb

Though not hitting the stride that High-Yield indexes have enjoyed, the MSCI Emerging Market Index posted an impressive 1.3 percent rally this past session. As one of the more risk-sensitive assets classes, the EM asset speculative ranks have stepped up more readily to the correction. However, here too, the volume is diminishing. Looking to the currency tables, FX performance tells the story of what is moving the international financial system. The Russian Ruble was one of the best performers against the US Dollar. Advancing 0.7 percent, the Ruble is making its first serious effort to turn its tide in a month. With a positive shift and appetite for risk, the story the markets flock to is belief that tensions over Ukraine are de-escalating. However, this assessment will likely prove more volatile than the situation itself if risk appetite turns.

Gold Heading Towards a Near-Term Breakout

The trading range gold has to work with is rapidly deteriorating. Having covered little more than $6 through the opening session, the backdrop for the precious metal is exceptionally quiet. Activity levels this low often sets the stage for at least a short-term break. The real question is whether a technical cue will find fundamental motivation to cover real ground. ETF volume through the open of the week was tepid and aggregate open interest in futures is just off of the five-year lows established last week. In the meantime, the net speculative position for futures traders reportedly shifted out of the bulls favor this past week (down 12.7 percent according to the COT) and the CBOE’s volatility index for gold is still carving out its rising trend. A break over the next 24 hours is unlikely to stir stronger appetites as it will fall outside the BoE’s quarterly report and the ECB’s GDP listings.**Bring the economic calendar to your charts with the DailyFX News App.

ECONOMIC DATA

GMT

Currency

Release

Survey

Previous

Comments

01:30

AUD

NAB Business Conditions (JUL)

2.00

Business Confidence in Australia has been on an uptrend since April, when it fell to 4.9, the lowest since July 2013

01:30

AUD

NAB Business Confidence (JUL)

8.00

01:30

AUD

House Price Index (YoY) (2Q)

9.30%

10.90%

Housing prices rose only 1.7% in 1Q of this year, cooling off from the 3.9% in 4Q of 2013, the highest since 4Q of 2009

01:30

AUD

House Price Index (QoQ) (2Q)

1.00%

1.70%

01:30

AUD

Credit Card Purchases (JUN)

$A22.9B

Net Balances have remained within a range of A$48B – A$51B since late 2010 after a rise from around A$44B in early 2009

01:30

AUD

Credit Card Balances (JUN)

$A50.0B

04:30

JPY

Capacity Utilization (MoM) (JUN)

-0.70%

The YoY Industrial Production saw a sharp rise in January at 10.1%, but has since cooled down and only rose 3.2% in June (Primary)

04:30

JPY

Industrial Production (MoM) (JUN F)

-3.30%

04:30

JPY

Industrial Production (YoY) (JUN F)

3.20%

09:00

EUR

Euro-Zone ZEW Survey (Econ Sentiment) (AUG)

48.10

The European survey suggests that expectations of economic growth in the Eurozone has fallen from a high of 73.3, the highest since February 2004, to 48.10 for the month of July, showing a shard downtrend

09:00

EUR

German ZEW Survey (Current Situation) (AUG)

54.00

61.80

09:00

EUR

German ZEW Survey (Econ Sentiment) (AUG)

17.00

27.10

11:30

USD

NFIB Small Business Optimism (JUL)

96.00

95.00

Reported an uptrend from Feb to May 2014 before falling slightly in June

14:00

USD

JOLTS Job Openings (JUN)

4550.00

4635.00

Risen by about 20% since January

18:00

USD

Monthly Budget Statement (JUL)

-$96.0B

Lower revenue against expenses will make government issue more bonds, dropping prices and increasing yields

23:50

JPY

Gross Domestic Product (QoQ) (2Q P)

-1.8%

1.6%

Japanese domestic production has been catching the headlines over the last few weeks as economists have expressed concerns with growth in the island nation’s economy. Lower than expected growth figures may stir speculation of added stimulus from the central bank, weighing on the Yen.

23:50

JPY

Gross Domestic Product Annualized (2Q P)

-7.1%

6.7%

23:50

JPY

Gross Domestic Product Deflator (YoY) (2Q P)

1.6%

-0.1%

23:50

JPY

Nominal Gross Domestic Product (QoQ) (2Q P)

0.0%

1.4%

23:50

JPY

GDP Consumer Spending (QoQ) (2Q P)

-3.7%

2.2%

23:50

JPY

GDP Business Spending (QoQ) (2Q P)

-3.0%

7.6%

GMT

Currency

Upcoming Events & Speeches

3:45

JPY

Japan to Sell 30-Year Bonds

9:30

GBP

UK to Sell 16-Year Bonds

-:-

EUR

Bank of Portugal Releases Data on Bank Sector

16:30

CAD

Canadian Finance Minister Oliver Speaks in Wakefield

17:00

USD

US to Sell $27 Bln in 3-Year Notes

23:50

JPY

Bank of Japan Releases July 14 – 15 Monetary Policy Minutes

SUPPORT AND RESISTANCE LEVELS

To see updated SUPPORT AND RESISTANCE LEVELS for the Majors, visit Technical Analysis Portal

To see updated PIVOT POINT LEVELS for the Majors and Crosses, visit our Pivot Point Table

CLASSIC SUPPORT AND RESISTANCE

EMERGING MARKETS 18:00 GMT

SCANDIES CURRENCIES 18:00 GMT

Currency

USD/MXN

USD/TRY

USD/ZAR

USD/HKD

USD/SGD

Currency

USD/SEK

USD/DKK

USD/NOK

Resist 2

13.5800

2.3800

12.7000

7.8165

1.3650

Resist 2

7.5800

5.8950

6.5135

Resist 1

13.3250

2.3000

11.8750

7.8075

1.3250

Resist 1

7.3285

5.8475

6.3145

Spot

13.2247

2.1418

10.7169

7.7500

1.2479

Spot

6.8969

5.5678

6.2834

Support 1

12.8350

2.0700

10.2500

7.7490

1.2000

Support 1

6.7750

5.3350

5.7450

Support 2

12.6000

1.7500

9.3700

7.7450

1.1800

Support 2

6.0800

5.2715

5.5655

INTRA-DAY PROBABILITY BANDS 18:00 GMT

\CCY

EUR/USD

GBP/USD

USD/JPY

USD/CHF

USD/CAD

AUD/USD

NZD/USD

EUR/JPY

Gold

Res 3

1.3468

1.6986

103.53

0.9144

1.0977

0.9377

0.8580

138.62

1304.30

Res 2

1.3449

1.6960

103.35

0.9130

1.0960

0.9359

0.8562

138.38

1299.11

Res 1

1.3429

1.6935

103.18

0.9116

1.0944

0.9342

0.8544

138.15

1293.92

Spot

1.3391

1.6884

102.82

0.9088

1.0911

0.9306

0.8507

137.68

1283.53

Supp 1

1.3353

1.6833

102.46

0.9060

1.0878

0.9270

0.8470

137.21

1273.14

Supp 2

1.3333

1.6808

102.29

0.9046

1.0862

0.9253

0.8452

136.98

1267.95

Supp 3

1.3314

1.6782

102.11

0.9032

1.0845

0.9235

0.8434

136.74

1262.76

v

You May Also Like

Related Forex Analysis
  1. Forex News

    USD/JPY climbs above 119.00 after jobless claims

  2. Forex News

    USD/CHF retreats to 0.9755 and rises back above 0.9800

  3. Forex News

    GBP/USD trims half of yesterday's losses

  4. Forex News

    EUR/USD moves off lows but lacks momentum

  5. Forex News

    Dollar Rally Post-FOMC Bolstered by Surprise SNB Action

Trading Center