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FOREX: US Dollar May Recover on Slovakia EFSF Vote, Alcoa Earnings

FOREX: US Dollar May Recover on Slovakia EFSF Vote, Alcoa Earnings

2011-10-11 08:11:00
Ilya Spivak, Sr. Currency Strategist
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Talking Points

  • US Dollar Rebounds in Asia, S&P 500 Futures Point to Further Gains Ahead
  • Alcoa Inc Q3 Earnings Report in Focus as Traders Gauge Global Slowdown
  • Euro Casts Wary Eye on Slovakia as Parliament Votes on New EFSF Powers

The US Dollar edged modestly higher in overnight trade, rising as much as 0.2 percent against its leading counterparts, as prices retraced the aggressive selloff over the preceding 24 hours. The greenback closed down 1.56 percent yesterday as a sharp rally in risk appetite weighed on demand for the go-to safe haven currency. The S&P 500 – a proxy for overall risk appetite – added 3.4 percent yesterday to mark the strongest one-day rally in nearly two months after German and French leaders promised to deliver a conclusive fix to the EU debt crisis by early November.

Looking ahead, all eyes are on Slovakia in early European trading hours. The country is the last Euro Zone member state to vote on the ratification of the expanded powers granted to the EFSF bailout fund on July 21, with newswires reporting that the four parties that make up the ruling coalition did not reach agreement on passing the measures as of yesterday. The reforms require unanimous approval by all 17 members of the currency bloc, meaning just one “no” vote would throw the process off-track and renew downward pressure on the Euro as well as risk appetite at large.

The spotlight then shifts to the US earnings calendar, with Alcoa Inc is due to release third-quarter results. The company is expected to report that earnings fell to 0.227per share, marking the weakest performance since the fourth quarter of 2010. The aluminum producer is a bellwether of sorts, with earnings releases typically coming early in the reporting season and the stock price tracking closely the S&P 500, so signs of weakness that reflect the larger global economic slowdown may prove to weigh on confidence at large. Futures tracking the US equity benchmark are down 0.4 percent, hinting risk aversion is indeed laying the foundation for a come-back.

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

21:45

NZD

NZ Card Spending (MoM) (SEP)

0.2%

-

-0.5%

21:45

NZD

NZ Card Spending - Retail (MoM) (SEP)

0.4%

1.1%

-0.5% (R+)

23:01

GBP

RICS House Price Balance (SEP)

-23%

-24%

-23%

23:01

GBP

BRC Sales Like-For-Like (YoY) (SEP)

0.3%

-0.9%

-0.6%

23:50

JPY

Adjusted Current Account Total (¥) (AUG)

652.6B

509.9B

752.5B

23:50

JPY

Current Account Total (¥) (AUG)

407.5B

453.6B

990.2B

23:50

JPY

Current Account Balance (YoY) (AUG)

-64.3%

-63.6%

-42.4%

23:50

JPY

Trade Balance - BOP Basis (¥) (AUG)

-694.7B

-692.3B

123.3B

0:30

AUD

NAB Business Confidence (SEP)

-2

-

-9 (R-)

0:30

AUD

NAB Business Conditions (SEP)

2

-

-3

4:30

JPY

Bankruptcies (YoY) (SEP)

-9.2%

-

-3.6%

5:00

JPY

Consumer Confidence (SEP)

38.6

37.2

37

5:00

JPY

Bank of Japan Monthly Economic Report

-

-

-

6:00

JPY

Eco Watchers Survey: Current (SEP)

45.3

46.5

47.3

6:00

JPY

Eco Watchers Survey: Outlook (SEP)

46.4

-

47.1

Euro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

8:30

GBP

DCLG UK House Prices (YoY) (AUG)

-1.5%

Low

8:30

GBP

Industrial Production (YoY) (AUG)

-1.2%

-0.7%

Medium

8:30

GBP

Industrial Production (MoM) (AUG)

-0.2%

-0.2%

Low

8:30

GBP

Manufacturing Production (MoM) (AUG)

-0.1%

0.1%

Low

8:30

GBP

Manufacturing Production (YoY) (AUG)

1.6%

1.9%

Medium

11:00

EUR

Slovakia Begins EFSF Ratification Vote

-

-

High

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.3426

1.3779

GBPUSD

1.5565

1.5729

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow me on Twitter at @IlyaSpivak

To be added to Ilya's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com

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