US Dollar May Rise Amid Pre-Positioning for Yellen Speech

Talking Points:

• 
  US Dollar seesaws upward amid pre-positioning for Yellen speech
  


• 
  NZ Dollar down as disappointing trade data weighs on RBNZ bets
  


• 
  Euro may not find lasting momentum in 2Q German GDP revision
  

The US Dollar corrected higher in overnight trade having traded broadly lower in the prior session. Seesaw price action since the beginning of the week seems to reflect pre-positioning ahead of a much-anticipated speech from Fed Chair Janet Yellen at the Jackson Hole Symposium on Friday.

A shift in priced-in policy bets implied in Fed Funds futures hints investors are leaning toward a hawkish outcome, hinting the greenback may find fuel for greater gains as the end of the week draws closer. The probability of a rate hike in December now stands at 53.9 percent compared 51 percent last week and 45.1 percent a month ago.

The New Zealand Dollar narrowly underperformed. The currency edged lower alongside front-end bond yields, hinting at a modest up-shift in RBNZ rate cut bets as the catalyst behind the decline. The move appeared to follow a disappointing Trade Balance report. The 12-month year-to-date deficit registered at –NZ$3.03 million versus –NZ$2.9 million expected.

Looking ahead, a revised set of second-quarter German GDP figures headlines an otherwise quiet European data docket. The release is expected to confirm the Eurozone’s largest economy added 0.4 percent in the three months through June. The figures will not capture the cooling effect of the “Brexit” referendum outcome and so seem unlikely to generate a lasting reaction from the Euro.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
22:45	NZD	Trade Balance (JUL)	-433m	-325m	110m
22:45	NZD	Exports (JUL)	3.96b	4.07b	4.25b
22:45	NZD	Imports (JUL)	4.40b	4.45b	4.14b
22:45	NZD	Trade Balance 12 Mth YTD (JUL)	-3034m	-2900m	-3331m
01:00	AUD	Skilled Vacancies MoM (JUL)	-0.6%	-	0.8%
01:30	AUD	Construction Work Done (2Q)	-3.7%	-2.0%	-2.6%
05:00	JPY	Leading Index CI (JUN F)	-	-	98.4
05:00	JPY	Coincident Index (JUN F)	-	-	110.5

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
06:00	EUR	German Private Consumption (QoQ) (2Q)	0.2%	0.4%	Low
06:00	EUR	German Government Spending (QoQ) (2Q)	0.5%	0.5%	Low
06:00	EUR	German Capital Investment (QoQ) (2Q)	-1.3%	1.8%	Low
06:00	EUR	German Construction Investment (QoQ) (2Q)	-2.8%	2.3%	Low
06:00	EUR	German Domestic Demand (QoQ) (2Q)	-0.1%	0.8%	Low
06:00	EUR	German Exports (QoQ) (2Q)	0.7%	1.0%	Low
06:00	EUR	German Imports (QoQ) (2Q)	-0.3%	1.4%	Low
06:00	EUR	German GDP s.a. (QoQ) (2Q F)	0.4%	0.4%	Medium
06:00	EUR	German GDP w.d.a. (YoY) (2Q F)	1.8%	1.8%	Medium
06:00	EUR	German GDP n.s.a. (YoY) (2Q F)	3.1%	3.1%	Medium
08:30	GBP	BBA Loans for House Purchase (JUL)	38000	40103	Low

Critical Levels

CCY	Supp 3	Supp 2	Supp 1	Pivot Point	Res 1	Res 2	Res 3
EUR/USD	1.1217	1.1269	1.1287	1.1321	1.1339	1.1373	1.1425
GBP/USD	1.3015	1.3097	1.3148	1.3179	1.3230	1.3261	1.3343

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

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US Dollar May Rise Amid Pre-Positioning for Yellen Speech
US Dollar May Rise Amid Pre-Positioning for Yellen Speech
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