Forex: Aussie Dollar Rallies on China Data, Euro Eyes PMI Revision

DailyFX

Talking Points

  • Aussie Dollar Rallies as China’s Service-Sector PMI Hits 14-Month High
  • Euro Looks to Manufacturing PMI Revision to Guide ECB Policy Outlook
  • US Dollar to View Factory Orders Data in Terms of Fed QE “Taper” Bets

Get Real-Time Feedback on Your Trades with DailyFX on Demand!

The Australian Dollar outperformed in otherwise quiet overnight trade, rising as much as 0.6 percent on average against its leading counterparts, following a strong set of Chinese Non-Manufacturing PMI data. The report showed service-sector activity expanded at the fastest pace in 14 months, boosting the outlook for economic growth in Australia’s top export market and thereby reducing scope for future RBA interest rate cuts. Traders are pricing in a mere 2 percent probability of a reduction in the baseline lending rate when at the central bank’s policy meeting tomorrow, according to figures from Credit Suisse.

The final revision of October’s Eurozone Manufacturing PMI print headlines the economic calendar in European hours. The release is expected to confirm flash estimates putting the index at 51.3, marking a narrow pickup in factory-sector activity from the prior month. The markets are likely to interpret the result in the context of shaping expectations for this week’s ECB interest rate decision. Soft news-flow punctuated by October’s unexpected CPI drop have fed calls for an expansion of stimulus and led the Euro sharply lower. A soft PMI revision would encourage such bets, amplifying selling pressure on the single currency, while an upside surprise may allow for a near-term bounce.

Later in the day, the spotlight shifts back to the US data docket, where the August and September editions of the Factory Orders data set are due to cross the wires. Investors continue to view US economic indicators in terms of their implications for timing the first reduction of Fed QE3 asset purchases. Orders are expected to have grown over both of the months in question after a slump in July, which may boost the US Dollar as traders consider the possibility of a comparatively sooner “tapering” of stimulus. News-flow out of the world’s top economy has notably softened relative to expectations (according to figures from Citigroup) over recent months however, leaving the door open for a downside surprise.

New to FX? START HERE!

Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

1:00

CNY

Non-Manufacturing PMI (OCT)

56.3

-

55.4

23:30

AUD

TD Securities Inflation (MoM) (OCT)

0.1%

-

0.2%

23:30

AUD

TD Securities Inflation (YoY) (OCT)

2.1%

-

2.1%

0:00

NZD

ANZ Commodity Price (OCT)

1.3%

-

1.0%

0:30

AUD

Retail Sales s.a. (MoM) (SEP_

0.8%

0.4%

0.5%

0:30

AUD

Retail Sales Ex Inflation (QoQ) (3Q)

0.7%

0.2%

-0.1%

0:30

AUD

House Price Index (QoQ) (3Q)

1.9%

2.2%

2.7%

0:30

AUD

House Price Index (YoY) (3Q)

7.6%

7.6%

5.4%

0:30

AUD

ANZ Job Advertisements (MoM) (OCT)

-0.1%

-

0.2%

Euro Session:

GMT

CCY

EVENT

EXP/ACT

PREV

IMPACT

8:45

EUR

Italian PMI Manufacturing (OCT)

51.0

50.8

Low

8:50

EUR

French PMI Manufacturing (OCT F)

49.4

49.4

Low

8:55

EUR

German PMI Manufacturing (OCT F)

51.5

51.5

Medium

9:00

EUR

Euro-Zone PMI Manufacturing (OCT F)

51.3

51.3

Medium

9:30

EUR

Euro-Zone Sentix Investor Confidence (NOV)

6.2

6.1

Low

9:30

GBP

PMI Construction (OCT)

58.7

58.9

Medium

Critical Levels:

CCY

SUPP 3

SUPP 2

SUPP 1

Pivot Point

RES 1

RES 2

RES 3

EURUSD

1.3299

1.3409

1.3448

1.3519

1.3558

1.3629

1.3739

GBPUSD

1.5685

1.5823

1.5874

1.5961

1.6012

1.6099

1.6237

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

To receive Ilya's analysis directly via email, please SIGN UP HERE

Contact and follow Ilya on Twitter: @IlyaSpivak

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.

Rates

View Comments (0)