5 Aug 2015
USD bulls dominate Asia, UK services PMI, a host of US data -Key
FXStreet (Mumbai) - Broad based US dollar strength remained the underlying theme in Asia with the greenback flexing its muscles boosted by the hawkish comments from Atlanta Fed President Lockhart delivered on Tuesday. While the Aussie remained the weakest, correcting heavy gains witnessed post RBA and the Kiwi also followed suit, dented by poor jobs data.
Key headlines in Asia
Caixin China Services PMI hits 11-month high
New Zealand's unemployment rate ticks up in Q2
Dominating themes in Asia - centered on JPY, AUD, NZD
A data-light Asian session, with the USD bulls retaining control across the FX board as Tuesday’s comments from Fed’s Lockhart citing that Sept would be the appropriate time for rate lift-off, which provided the much-needed impetus for the last leg up in the USD.
The Aussie retraced from two-week peak reached at 0.7429 and now trades near 0.7350 levels on profit-taking after the recent strength ahead of key Aus employment data lined up for release tomorrow. While the Kiwi remains largely subdued weighed by downbeat jobs data.
The NZ jobless rate was seen rising from 5.8% in the March quarter to 5.9% in the June quarter. Employment growth slowed from 0.7% to just 0.3%, with only 7,000 more people employed over the quarter, the weakest increase since the March 2013 quarter.
Moreover, upbeat China services PMI data did little to lift the sentiment around the Antipodean currencies. Caixin China Services PMI came in at 53.8 in July, up from June’s recent low of 51.8, hitting an 11-month high.
The dollar-yen pair failed another attempt to conquer 124.50 levels and trades muted awaiting fresh incentives from a batch of significant US data flow due later tonight.
Asian markets are mostly trading mixed with Nikkei in Tokyo gaining 0.70% to trade at 20657. While Chinese markets erased initial gains and fell in to the red zone, SSEC -1.27%. The Australian benchmark S&P/ASX 200 is down -0.59% at 5664. While South Korea’s Kospi advances 0.10%.
Heading into Europe - centered on EUR, GBP
In the session ahead, the UK services PMI is expected to remain the main market mover while 2nd-tier data in final services PMI reports across the Euro area economies will fill in a relatively light EUR calendar.
The UK services PMI in July is seen ticking down to 58.0 from the 58.5 booked in the previous cycle. The euro zone services sector reported 53.8 last time, with the same number expected as a final result. While the PMI for the euro area's number one economy's services sector showed 53.7.
We have an eventful North American session today, with a batch of crucial economic releases on the cards. The session will kick-off with US ADP non-farm employment change numbers, usually a forerunner for Friday’s NFP data, followed by trade figures from the US and Canada. Finally US services sector report release will wrap up the data-heavy session.
Analysts at Credit Suisse noted, "ADP Employment is projected to rise by 210k, 27k below June’s 237k growth. We expect ISM non-manufacturing to tick down from 56.0 to 55.7 (consensus 56.3).”
While as markets anticipate, the baseline scenario going into the release of the June trade figures is that the nominal trade deficit is expected to have widened to $42.2 billion from the $41.9 billion seen in May.
EUR/USD Technicals
Research Team at AceTrader noted, "Yesterday's breach of last week's low at 1.0894 ansd then daily close below there signals euro's correction from July's 12-week trough at 1.0808 has ended earlier at 1.1129 and consolidation with downside bias remains. However, break of 1.0808 needed to confirm MT decline from 1.1467 (May) has resumed and extend weakness to 1.0700 later in this month.”
“On the upside, a move back above 1.0988/96 would prolong choppy trading but price should falter well below resistance area a 1.1114-29 and yield another sell-off.”
Key headlines in Asia
Caixin China Services PMI hits 11-month high
New Zealand's unemployment rate ticks up in Q2
Dominating themes in Asia - centered on JPY, AUD, NZD
A data-light Asian session, with the USD bulls retaining control across the FX board as Tuesday’s comments from Fed’s Lockhart citing that Sept would be the appropriate time for rate lift-off, which provided the much-needed impetus for the last leg up in the USD.
The Aussie retraced from two-week peak reached at 0.7429 and now trades near 0.7350 levels on profit-taking after the recent strength ahead of key Aus employment data lined up for release tomorrow. While the Kiwi remains largely subdued weighed by downbeat jobs data.
The NZ jobless rate was seen rising from 5.8% in the March quarter to 5.9% in the June quarter. Employment growth slowed from 0.7% to just 0.3%, with only 7,000 more people employed over the quarter, the weakest increase since the March 2013 quarter.
Moreover, upbeat China services PMI data did little to lift the sentiment around the Antipodean currencies. Caixin China Services PMI came in at 53.8 in July, up from June’s recent low of 51.8, hitting an 11-month high.
The dollar-yen pair failed another attempt to conquer 124.50 levels and trades muted awaiting fresh incentives from a batch of significant US data flow due later tonight.
Asian markets are mostly trading mixed with Nikkei in Tokyo gaining 0.70% to trade at 20657. While Chinese markets erased initial gains and fell in to the red zone, SSEC -1.27%. The Australian benchmark S&P/ASX 200 is down -0.59% at 5664. While South Korea’s Kospi advances 0.10%.
Heading into Europe - centered on EUR, GBP
In the session ahead, the UK services PMI is expected to remain the main market mover while 2nd-tier data in final services PMI reports across the Euro area economies will fill in a relatively light EUR calendar.
The UK services PMI in July is seen ticking down to 58.0 from the 58.5 booked in the previous cycle. The euro zone services sector reported 53.8 last time, with the same number expected as a final result. While the PMI for the euro area's number one economy's services sector showed 53.7.
We have an eventful North American session today, with a batch of crucial economic releases on the cards. The session will kick-off with US ADP non-farm employment change numbers, usually a forerunner for Friday’s NFP data, followed by trade figures from the US and Canada. Finally US services sector report release will wrap up the data-heavy session.
Analysts at Credit Suisse noted, "ADP Employment is projected to rise by 210k, 27k below June’s 237k growth. We expect ISM non-manufacturing to tick down from 56.0 to 55.7 (consensus 56.3).”
While as markets anticipate, the baseline scenario going into the release of the June trade figures is that the nominal trade deficit is expected to have widened to $42.2 billion from the $41.9 billion seen in May.
EUR/USD Technicals
Research Team at AceTrader noted, "Yesterday's breach of last week's low at 1.0894 ansd then daily close below there signals euro's correction from July's 12-week trough at 1.0808 has ended earlier at 1.1129 and consolidation with downside bias remains. However, break of 1.0808 needed to confirm MT decline from 1.1467 (May) has resumed and extend weakness to 1.0700 later in this month.”
“On the upside, a move back above 1.0988/96 would prolong choppy trading but price should falter well below resistance area a 1.1114-29 and yield another sell-off.”