Forex: US Dollar Looking for Fed Policy Clues in Durable Goods Report
Talking Points:
NZ Dollar Higher on RBNZ Rate Hike But Gains May Prove Fleeting
Upside Surprise on German IFO Survey Data May Not Help the Euro
US Dollar Looks to Extend Recovery, Eyeing Durable Goods Report
The New Zealand Dollar outperformed in otherwise quiet overnight trade after the Reserve Bank of New Zealand (RBNZ) raised its benchmark interest rate to 3 percent, the highest since January 2011. Follow-through may be limited however. The monetary policy statement seemed to suggest that the level of the exchange rate will be considered in setting future policy, which presumably suggests that appreciation will undermine the case for further tightening. That may undermine traders’ interest in the Kiwi, capping upside potential.
Germany’s IFO Survey of business confidence headlines the economic calendar in European hours. The headline Business Climate index is expected to tick lower to 110.4 in April, marking the second consecutive decline and the lowest level in four months. An upside surprise may be in the cards as persistent disinflation feeds ECB interest rate cut speculation. Indeed, a measure of the priced-in 12 month policy outlook has notably trended lower since the beginning of the month. A pickup in sentiment driven by hopes for monetary easing hardly bodes well for the Euro however.
Later in the day, the spotlight turns to the US Durable Goods Orders report. A 2 percent increase is expected in March, an outcome that would mark a slight slowing compared with the 2.2 percent gain recorded in February. Economic data outcomes from the world’s largest economy notably improved relative to forecasts in the past two weeks however (according to data from Citigroup). If that trend continues, ebbing doubt about the continued withdrawal of Fed stimulus may offer yield-based support for the US Dollar.
New to FX? START HERE!
Asia Session
GMT | CCY | EVENT | ACT | EXP | PREV |
21:00 | NZD | RBNZ Interest Rate Decision | 3.00% | 3.00% | 2.75% |
23:50 | JPY | Corporate Service Price (YoY) (MAR) | 0.7% | 0.7% | 0.7% |
2:00 | CNY | Conference Board Leading Index (MAR) | 285.7 | - | 282.3 |
European Session
GMT | CCY | EVENT | EXP | PREV | IMPACT |
6:00 | CHF | Trade Balance (CHF) (MAR) | - | 2.62B | Medium |
6:00 | CHF | Imports (MoM) (MAR) | - | 0.8% | Low |
6:00 | CHF | Exports (MoM) (MAR) | - | 0.4% | Low |
8:00 | EUR | German IFO - Business Climate (APR) | 110.5 | 110.7 | High |
8:00 | EUR | German IFO - Current Assessment (APR) | 115.7 | 115.2 | High |
8:00 | EUR | German IFO - Expectations (APR) | 105.8 | 106.4 | High |
10:00 | GBP | CBI Reported Sales (APR) | 17 | 13 | Low |
Critical Levels
CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
EUR/USD | 1.3714 | 1.3769 | 1.3793 | 1.3824 | 1.3848 | 1.3879 | 1.3934 |
GBP/USD | 1.6648 | 1.6721 | 1.6751 | 1.6794 | 1.6824 | 1.6867 | 1.6940 |
--- 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.