TALKING POINTS – YEN, US DOLLAR, GLOBAL SLOWDOWN, PMI, CPI, ISM, PCE
- Yen down as Asia Pacific bourses rise following upbeat US GDP information
- Eurozone PMI and CPI information might assist revive world slowdown worries
- US Dollar might rise as sentiment sours on firming Fed coverage outlook
The anti-risk Japanese Yen broadly weakened in in any other case inconclusive Asia Pacific commerce throughout the G10 FX spectrum. The transfer echoed good points throughout most regional bourses. The information wires attributed the transfer to optimism stoked by unexpectedly strong US GDP data and hopes for an imminent in US-China commerce negotiations. Experiences citing unnamed officers declare a deal could also be signed in a matter of weeks.
EUROZONE PMI, CPI DATA MIGHT COOL INVESTOR OPTIMISM
A remaining have a look at February’s Eurozone manufacturing PMI figures is predicted to verify flash estimates displaying the primary contraction since June 2013. That will underscore worries a few broader slowdown in world development. In opposition to this backdrop, an anticipated uptick in regional CPI inflation would possibly emerge as an additional legal responsibility for sentiment, hinting the ECB could be gradual to supply a counter-cyclical response.
This would possibly cool the exuberance seen in APAC hours to some extent, however a dedicated push will in all probability rely on follow-on US financial releases. Certainly, proof of sluggish efficiency within the single foreign money space would reconfirm one thing already identified to buyers moderately than introduce a novel issue with scope for longer-lasting repositioning.
US ECONOMIC DATA MAY BOOST DOLLAR, HURT BROADER MARKETS
The US docket presents a various array of catalysts. The Fed’s favored PCE inflation gauge is predicted to place value development simply shy of the coverage goal at 1.9 %, the manufacturing ISM survey is because of present a slight slowdown within the tempo of sector exercise development and the ultimate studying for February’s College of Michigan shopper confidence is seen being revised increased.
Priced-in coverage bets implied in Fed Funds futures recommend the markets are actually working on the premise that charges will virtually actually stay unchanged this yr – forcing the Fed to backtrack on the 50 foundation factors in tightening nonetheless featured in official forecasts – and a minimize will probably be issued in 2020. Information suggesting such a view could also be too dovish is prone to be extra market-moving than the choice.
Such a situation is prone to be supportive for the US Greenback. Extra broadly, something that strikes Fed coverage bets away from the dovish facet of the spectrum might rattle shell-shocked buyers fearful about any transfer to tighten credit score situations amid mounting signs of a downturn in the global business cycle. Agency outcomes might thus prove to bitter sentiment, curbing Yen losses and weighing on pro-risk commodity currencies.
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ASIA PACIFIC TRADING SESSION
EUROPEAN TRADING SESSION
** All instances listed in GMT. See the full economic calendar here.
FX TRADING RESOURCES
— Written by Ilya Spivak, Foreign money Strategist for DailyFX.com
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