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FOREX: Dollar Sold on Strong US Data, Greek Bailout Deal Hopes

FOREX: Dollar Sold on Strong US Data, Greek Bailout Deal Hopes

Ilya Spivak, Head Strategist, APAC

Talking Points

  • Dollar and Yen Sold on Strong US Economic Data, Greek Bailout Deal Hopes
  • Major Directional Moves Unlikely Before Monday’s Eurozone FinMin Meeting
  • US Leading Indicators Gauge to Hit 3-Year High, Core Inflation Unchanged

The US Dollar and Japanese Yen declined against their major counterparts as risk appetite recovered in overnight trade, sending capital out of the go-to safe haven currencies. The MSCI Asia Pacific regional benchmark equity index added 1.1 percent, buoyed by a strong set of US economic data that broadly exceeded expectations and bolstered the outlook for demand in the region’s core export market. News that the European Central Bank will participate in a Greek bond swap meant to reduce the country’s debt burden added to the chipper mood, fueling hopes that a long-delayed agreement on a second bailout package will be reached before maturing obligations force Athens to default in late March.

Looking ahead, a relatively quiet European economic calendar leaves the hopeful mood to play out ahead of Monday’s Eurozone finance ministers’ meeting where the final Greek deal is expected to be concluded. EU officials have blown their share of deadlines on this issue however, meaning traders are unlikely to commit to a meaningful directional bias until it is removed as a distraction from larger trends. Indeed, S&P 500 stock index futures are flat heading into the final hours of the trading week, seemingly reflecting just such an attitude.

US Consumer Price Index figures will come into the picture in the latter half of the session, with core inflation expected to hold unchanged at 2.2 percent to signal no substantial changes in the Federal Reserve policy outlook. The composite Leading Indicators gauge may help to sustain the cautiously optimistic tone now at work, with expectations calling for a 0.5 percent monthly increase to yield the highest reading since July 2008.

Asia Session: What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

1:35

CNY

MNI Flash Business Sentiment Survey (FEB)

58.16

-

55.95

Euro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

7:00

EUR

German Producer Prices (MoM) (JAN)

0.3%

-0.4%

Medium

7:00

EUR

German Producer Prices (YoY) (JAN)

3.2%

4.0%

Medium

9:00

EUR

Euro-Zone Current Account n.s.a. (€) (DEC)

-

1.0B

Low

9:00

EUR

Euro-Zone Current Account s.a. (€) (DEC)

-

-1.8B

Low

9:30

GBP

Retail Sales ex Auto Fuel (MoM) (JAN)

-0.3%

0.6%

Medium

9:30

GBP

Retail Sales ex Auto Fuel (YoY) (JAN)

-0.1%

1.7%

Medium

9:30

GBP

Retail Sales w/ Auto Fuel (MoM) (JAN)

-0.2%

0.6%

Low

9:30

GBP

Retail Sales w/ Auto Fuel (YoY)(JAN)

0.6%

2.6%

Low

10:00

EUR

Euro-Zone Construction Output (MoM) (DEC)

-

0.8%

Low

10:00

EUR

Euro-Zone Construction Output (YoY) (DEC)

-

0.2%

Low

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.3017

1.3202

GBPUSD

1.5699

1.5919

--- 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

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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