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Dollar May Recover as Risky Assets Correct Lower into the Week-End

Ilya Spivak

Talking Points


  • Dollar May Recover as Risky Assets Correct Lower into Week-End
  • Eurozone Finance Ministers to Begin Funding Spain Bank Bailout
  • Ingersoll-Rand, General Electrical in Focus on the Earnings Docket


The US Dollar edged narrowly higher in overnight trade as Asian shares declined, rebooting demand for the go-to safe haven currency. The MSCI Asia Pacific regional benchmark stock index fell 0.3 percent as traders responded to the day’s disappointing set of US economic data. The Philadelphia Fed survey showed manufacturing shrank at a faster pace than economists predicted in July while Existing Home Sales unexpectedly fell in June. Markets interpreted these outcomes as a negative driver for Asian exporters’ overseas demand outlook. Lingering QE3 expectations continued to cap the greenback anchored however, keeping the rebound modest.


A quiet economic data docket through the end of the trading week elevates an assortment of potential catalysts into the spotlight. Eurozone finance ministers are scheduled to hold a conference call to pave the way for the disbursement of the first €30 billion in Spain’s bank sector bailout. The outing is likely to pass with little fanfare, but there remains a possibility for knee-jerk volatility if any particularly attention-grabbing headlines emerge. On the earnings front, bellwether names like Ingersoll-Rand and General Electric are in focus, with traders continuing to monitor guidance amid worries of a deepening global slowdown into the second half of the year. S&P 500 stock index futures are pointing lower, hinting a pullback in risky assets may support a recovery in the US Dollar after five consecutive days of losses.



Asia Session: What Happened


GMT

CCY

EVENT

ACT

EXP

PREV

22:45

NZD

Net Migration s.a. (JUN)

490

-

200 (R+)

1:30

AUD

Export Price Index (QoQ) (2Q)

1.0%

0.0%

-7.0%

1:30

AUD

Import Price Index (QoQ) (2Q)

2.4%

1.5%

-1.2%

1:35

CNY

MNI Flash Business Sentiment Survey (JUL)

49.63

-

53.21

3:00

NZD

Credit Card Spending s.a. (MoM) (JUN)

0.8%

-

0.4%

3:00

NZD

Credit Card Spending (YoY) (JUN)

4.6%

-

3.9%



Euro Session: What to Expect


GMT

CCY

EVENT

EXP

PREV

IMPACT

6:00

EUR

German Producer Prices (MoM) (JUN)

-0.2%

-0.3%

Medium

6:00

EUR

German Producer Prices (YoY) (JUN)

1.8%

2.1%

Medium

7:00

JPY

Convenience Store Sales (YoY) (JUN)

-

1.70%

Low

8:30

GBP

Public Finances (PSNCR) (Pounds) (JUN)

8.5B

-4.4B

Low

8:30

GBP

PSNB ex Interventions (JUN)

13.4B

17.9B

Low

8:30

GBP

Public Sector Net Borrowing (Pounds) (JUN)

11.2B

15.6B

Low



Critical Levels


CCY

SUPPORT

RESISTANCE

EURUSD

1.2183

1.2327

GBPUSD

1.5662

1.5763



--- 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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