NIKKEI 225 Talking Points:
- Pound drops on “hard Brexit” fears before key UK PM May speech
- ISM and ADP data may feed Fed rate hike bets, boosting US Dollar
- NZ Dollar falls as milk price drop stokes RBNZ rate cut speculation
The British Pound traded lower as worries about a “hard Brexit” continued to swell ahead of a much-anticipated speech from Prime Minister Theresa May at the conclusion of the Conservative Party Conference in Birmingham. The UK unit has faced heavy selling pressure since the Premier hinted at an early-2017 timeline for starting the EU exit process and suggested that immigration controls will take precedence over securing access the single market over the weekend.
The final round of UK PMI figures will probably pass with little fanfare as investors opt against committing to a directional bias before Ms May’s remarks. A policy speech from BOE Deputy Governor Ben Broadbent may generate a bit more attention if he suggests that the central bank is gearing up to boost stimulus further in anticipation of a rocky EU negotiation. Still, lasting follow-through seems unlikely until after the Prime Minister has laid out her vision.
Later in the day, US economic data will be in focus as ISM Non-manufacturing Composite gauge and the ADP Employment report cross the wires. A pickup in service-sector activity growth (53.0 vs. 51.4 prior) and a mild slowdown in job creation (165k vs. 177k prior) are expected in September. Recent stabilization in US news-flow relative to consensus forecasts may foreshadow outcomes broadly in line with recent trends, which FOMC officials have signaled are supportive for a rate hike before the end of the year. Confirming as much may boost the US Dollar.
The New Zealand Dollar underperformed in overnight trade after dairy auction produced the lowest prices in two months. The drop was seemingly interpreted as encouraging a more dovish RBNZ posture as reduced revenues on sales of the island nation’s top export commodity hurt overall economic growth. Indeed, the currency paced a decline in front-end bond yields. The priced-in probability of a 25bps cut at next month’s policy meeting now stands at 68 percent.
Losing money trading in the FX market? This might be why.
Asia Session
GMT | CCY | EVENT | ACT | EXP | PREV |
22:30 | AUD | AiG Perf of Services Index (SEP) | 48.9 | - | 45 |
23:01 | GBP | BRC Shop Price Index (YoY) (SEP) | -1.8% | - | -2.0% |
00:00 | NZD | ANZ Commodity Price (SEP) | 5.1% | - | 3.2% |
00:00 | USD | Chicago FRB Evans Addresses CFA Society Event | - | - | - |
00:30 | JPY | Nikkei Japan PMI Services (SEP) | 48.2 | - | 49.6 |
00:30 | JPY | Nikkei Japan PMI Composite (SEP) | 48.9 | - | 49.8 |
00:30 | AUD | Retail Sales (MoM) (AUG) | 0.4% | 0.2% | 0.0% |
05:30 | NZD | RBNZ’s McDermott Comments on Panel | - | - | - |
European Session
GMT | CCY | EVENT | EXP | PREV | IMPACT | |
07:00 | EUR | ECB’s Nowotny Speaks in Vienna | - | - | Low | |
07:45 | EUR | Markit/ADACI Italy Services PMI (SEP) | 52.0 | 52.3 | Low | |
07:45 | EUR | Markit/ADACI Italy Composite PMI (SEP) | 51.5 | 51.9 | Low | |
07:50 | EUR | Markit France Services PMI (SEP F) | 54.1 | 54.1 | Low | |
07:50 | EUR | Markit France Composite PMI (SEP F) | 53.3 | 53.3 | Low | |
07:55 | EUR | Markit Germany Services PMI (SEP F) | 50.6 | 50.6 | Medium | |
07:55 | EUR | Markit/BME Germany Composite PMI (SEP F) | 52.7 | 52.7 | Medium | |
08:00 | EUR | Markit Eurozone Services PMI (SEP F) | 52.1 | 52.1 | Medium | |
08:00 | EUR | Markit Eurozone Composite PMI (SEP F) | 52.6 | 52.6 | Medium | |
08:30 | GBP | Official Reserves Changes (SEP) | - | -$463m | Low | |
08:30 | GBP | Markit/CIPS UK Services PMI (SEP) | 52.2 | 52.9 | Medium | |
08:30 | GBP | Markit/CIPS UK Composite PMI (SEP) | 52.3 | 53.6 | Medium | |
08:30 | GBP | BOE’s Broadbent Speaks in London | - | - | Medium | |
09:00 | EUR | Retail Sales (MoM) (AUG) | -0.3% | 1.1% | Low | |
09:00 | EUR | Retail Sales (YoY) (AUG) | 1.5% | 2.9% | Low | |
10:30 | GBP | UK PM May Speaks at Conservative Party Conf. | - | - | High | |
Critical Levels
CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
EUR/USD | 1.0992 | 1.1093 | 1.1148 | 1.1194 | 1.1249 | 1.1295 | 1.1396 |
GBP/USD | 1.2488 | 1.2629 | 1.2678 | 1.2770 | 1.2819 | 1.2911 | 1.3052 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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