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

2012-07-20 05:00:00 Ilya Spivak, Head Strategist, APAC

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