The greenback closed out North American trade on firmer footing with the Dow Jones FXCM Dollar Index (Ticker: USDollar) advancing a modest 0.13% on the session. In his semi-annual policy statement before the Senate Banking committee, Fed Chairman Ben Bernanke pulled back expectations for QE3 citing the central bank had no plans for further easing at this time. Commodities and equities immediately started to pair gains on speculation that further easing was no longer on the table, with the Dow, the S&P 500, and the NASDAQ closing lower by 0.44%, 0.67%, and 1.22% on the session. Although the index broke below a shorter term ascending channel, a daily chart sees the greenback maintaining the longer encompassing channel dating back to late April.
As noted in yesterday’s dollar wrap-up, the index broke through the lower bound trendline of the ascending channel dating back to early June before finding support at the June 14th low at 9525. The dollar quickly rebounded back above the 50% Fibonacci retracement taken from the May ascent at 9550, where interim support now stands. For this move to be a confirmed break, we would want to see a break below the 61.8% retracement at 9500. Topside resistance for the greenback now stands at the former channel support, currently at 9587, backed by the 38.2% extension at 9600.
A look at the component currencies sees the dollar advancing against three of the four currencies, highlighted by a 0.32% run against the aussie. As markets began to discount further Fed easing, risk appetite quickly dwindled putting the high yielding aussie on the defensive as traders unwound risk holdings. Event risk peaks tomorrow with the June CPI, industrial productions, and the University of Michigan confidence surveys on tap. Consensus estimates call for inflation to remain steadfast at 3.6% y/y while core CPI ex food and energy is expected to uptick to 1.6% y/y from a previous read of 1.5% y/y. Industrial production and the confidence figures are seen climbing and may provide further relief for the battered dollar. The greenback is likely to continue to consolidate heading into the weekend as trade thins out and investors await further developments on European bank stress test and the US debt limit debate.
Upcoming Events
|
Country |
Date |
GMT |
Importance |
Release |
Expected |
Prior |
|
US |
7/15 |
12:30 |
MEDIUM |
Consumer Price Index (MoM) (JUN) |
-0.1% |
0.2% |
|
US |
7/15 |
12:30 |
HIGH |
Consumer Price Index (YoY) (JUN) |
3.6% |
3.6% |
|
US |
7/15 |
12:30 |
MEDIUM |
Consumer Price Index Ex Food & Energy (MoM) (JUN) |
0.2% |
0.3% |
|
US |
7/15 |
12:30 |
HIGH |
Consumer Price Index Ex Food & Energy (YoY) (JUN) |
1.6% |
1.5% |
|
US |
7/15 |
12:30 |
MEDIUM |
Consumer Price Index Core Index s.a. (JUN) |
- |
224.387 |
|
US |
7/15 |
12:30 |
MEDIUM |
Consumer Price Index n.s.a. (JUN) |
- |
225.964 |
|
US |
7/15 |
12:30 |
LOW |
Empire Manufacturing (JUL) |
4.20 |
-7.79 |
|
US |
7/15 |
13:15 |
MEDIUM |
Industrial Production (JUN) |
0.3% |
0.1% |
|
US |
7/15 |
13:15 |
LOW |
Capacity Utilization (JUN) |
77.0% |
76.7% |
|
US |
7/15 |
13:55 |
HIGH |
U. of Michigan Confidence (JUL P) |
72.5 |
71.5 |
Written by Michael Boutros, Currency Analyst for DailyFX.com
To contact the author of this report or subscribe to their daily analysis, please send inquiries to:mboutros@dailyfx.com
You can also follow Michael on Twitter@MBForex
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