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FOREX: US Dollar Weakness Likely as Stocks Extend Year-End Recovery
Created on Monday, 26 December 2011 23:41Category: Currencies
The US Dollar may turn lower as improving economic data encourages seasonal profit-taking on bets favoring investors’ go-to safe haven currency.
Talking Points
- Australian Dollar Underperforms in Quiet Overnight Trade
- US Economic Data in Focus as FX Markets Look for Catalyst
Most major currencies
A gauge of Chinese Industrial Profits fell to the lowest since August 2009 while the minutes from November’s Bank of Japan policy meeting revealed the bank saw increased downside risks for the world’s third-largest economy, saying a softening outlook for global activity at large as well as the strong Yen exchange rate are poised to hurt capital investment and employment. A survey of economists polled by Bloomberg suggests overall Asian GDP will add 7.2 percent in 2012, the weakest outcome since the 2009 increase of 6.1 percent recorded in the wake of the Great Recession.
Looking ahead, a virtually empty European calendar is likely to keep traders’ attention on the US data docket set to cross the wires in the afternoon. Expectations point to nominal improvements in the Consumer Confidence as well as the Richmond and Dallas Federal Reserves’ measures of manufacturing activity (released independently of one another). While such outcomes do not present anything materially game-changing considering the tone of US economic data has been quietly but steadily improving since June, they may certainly prove sufficient to support continuation of the rebound in risky assets amid seasonal profit-taking witnessed last week. Needless to say, such an outcome bodes ill for the safe-haven US Dollar, although a clear lack of liquidity behind current moves suggests their implications for larger trends are questionable.
Asia Session: What Happened
| GMT | CCY | EVENT | ACT | EXP | PREV |
| 23:50 | JPY | Corporate Service Price (YoY) (NOV) | -0.2% | 0.0% | 0.1% |
| 23:50 | JPY | Bank of Japan Nov 15-16 Meeting Minutes | - | - | - |
| 2:00 | CNY | Industrial Profits YTD (YoY) (NOV) | 24.4% | - | 25.3% |
| 4:00 | JPY | Vehicle Production (YoY) (NOV) | 4.5% | - | 20.3% |
| 5:00 | JPY | Construction Orders (YoY) (NOV) | 21.0% | - | 24.3% |
| 5:00 | JPY | Annualized Housing Starts (NOV) | 0.845M | 0.802M | 0.774M |
| 5:00 | JPY | Housing Starts (YoY) (NOV) | -0.3% | -4.9% | -5.8% |
| 5:00 | JPY | Small Business Confidence (DEC) | 45.6 | - | 45.8 |
Euro Session: What to Expect
| GMT | CCY | EVENT | EXP | PREV | IMPACT |
| 7:00 | CHF | UBS Consumption Indicator (NOV) | - | 0.91 | Low |
Critical Levels
| CCY | SUPPORT | RESISTANCE |
| EURUSD | 1.3037 | 1.3108 |
| GBPUSD | 1.5594 | 1.5749 |
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
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Courtesy Yahoo Financial News