The US Dollar is under pressure as hopes for Fed stimulus boost risk appetite but a disappointment looks likely to reverse the greenback’s fortunes.
Talking Points
- Haven Currencies Fall as Risk Appetite Firms on FOMC Stimulus Hopes
- US Dollar Likely to Recover as Fed Disappoints Hopes for Additional QE
The safe-haven US Dollar and Japanese Yen pushed lower and S&P 500 stock index futures rose overnight amid hopes the Federal Reserve will announce additional stimulus measures at the monthly meeting of the rate-setting FOMC committee. A disappointment seems likely however, with Ben Bernanke and company opting not to stray from familiar territory. Such an outcome is likely to weigh on risk appetite, boosting the greenback and punishing its stocks-linked counterparts.
Yields across the maturity spectrum are hovering near record lows having arrived there without new stimulus since QE2 ended in June 2011. It seems unreasonable to suggest that more asset purchases are needed to keep credit costs capped or that marginally cheaper funding will bring a significant number of would-be borrowers off the sidelines. That means the core benefit of a QE3 program would be psychological, marking it as a tool the Fed is likely to reserve to use in the event that the Eurozone debt crisis breeds a 2008-style credit crunch.
Asia Session: What Happened
|
GMT |
CCY |
EVENT |
ACT |
EXP |
PREV |
|
23:01 |
GBP |
BRC Shop Price Index (YoY) (JUL) |
1.0% |
- |
1.1% |
|
23:15 |
AUD |
RPData – Rismark House PX Actual (JUL) |
0.6% |
- |
1.0% |
|
23:30 |
AUD |
AiG Performance of Manufacturing Index (JUL) |
40.3 |
- |
47.2 |
|
1:00 |
CNY |
Manufacturing PMI (JUL) |
50.1 |
50.5 |
50.2 |
|
1:30 |
AUD |
House Price Index (YoY) (2Q) |
-2.1% |
-4.2% |
-3.5% (R-) |
|
1:30 |
AUD |
House Price Index (QoQ) (2Q) |
0.5% |
-0.5% |
-0.1% (R-) |
|
2:30 |
CNY |
HSBC Manufacturing PMI (JUL) |
49.3 |
- |
48.2 |
|
5:00 |
JPY |
Vehicle Sales (YoY) (JUL) |
36.1% |
- |
40.9% |
|
6:00 |
GBP |
Nationwide House Prices n.s.a. (YoY) (JUL) |
-2.6% |
-1.9% |
-1.5% |
|
6:00 |
GBP |
Nationwide House Prices s.a. (MoM) (JUL) |
-0.7% |
-0.2% |
-0.6% |
|
6:30 |
AUD |
RBA Commodity Price Index (JUL) |
95.8 |
- |
98.1 (R+) |
|
6:30 |
AUD |
RBA Commodity Index SDR (YoY) (JUL) |
-9.8% |
- |
-9.9% (R+) |
Euro Session: What to Expect
|
GMT |
CCY |
EVENT |
EXP |
PREV |
IMPACT |
|
7:45 |
EUR |
Italian PMI Manufacturing (JUL) |
44.1 |
44.6 |
Low |
|
7:50 |
EUR |
French PMI Manufacturing (JUL F) |
43.6 |
43.6 |
Low |
|
7:55 |
EUR |
German PMI Manufacturing (JUL F) |
43.3 |
43.3 |
Medium |
|
8:00 |
EUR |
Euro-Zone PMI Manufacturing (JUL F) |
44.1 |
44.1 |
Medium |
|
8:30 |
GBP |
PMI Manufacturing (JUL) |
48.4 |
48.6 |
Medium |
Critical Levels
|
CCY |
SUPPORT |
RESISTANCE |
|
EURUSD |
1.2259 |
1.2340 |
|
GBPUSD |
1.5574 |
1.5730 |
— 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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This article (Dollar Sold as Risk Appetite Firms Before FOMC But Reversal Beckons) was originally developed by and is property of American Banking News. Checkout American Banking News for up-to-date banking news and peer to peer lending news.