Dollar Rebounds as Markets Digest Uneventful Bernanke Speech

2013-07-18 08:05:00 Ilya Spivak, Head Strategist, APAC

The US Dollar recovered against its top counterparts after Fed Chairman Ben Bernanke’s testimony proved uneventful, driving a correction in the markets.

Talking Points

US Dollar Recovers as Markets Unwind Pre-Bernanke Positioning
Pound Unlikely to Find Lasting Catalyst in Retail Sales Report

The US Dollar rose against its top counterparts, adding as much as 0.4 percent on average, as Asian markets reacted to yesterday’s closely-watched testimony from Federal Reserve Chairman Ben Bernanke. The central bank chief was careful to stick closely to a familiar script, reiterating that the decision to taper asset purchases is dependent on incoming economic data and highlighting the difference between reducing QE and tightening monetary policy. Within that context, the greenback’s advance appears corrective, marking an unwinding of weakness seen ahead of Bernanke’s testimony that likely reflected traders’ worries about a dovish tone emerging from his remarks.

The economic calendar is relatively quiet in European trading hours. UK Retail Sales figures headline the docket, with core receipts (excluding auto fuel) expected to rise 1.6 year-on-year in June. A print in line with expectations would fall closely in line with the 12-month trend average, offering relatively little impetus to drive BOE monetary policy speculation and thereby the British Pound. Furthermore, the analogous release from the British Retail Consortium (BRC) has already telegraphed a slight slowdown in sales activity in June, suggesting traders likely to look past the report absent a particularly large deviation from the consensus forecast.

Later in the day, the spotlight turns to Ben Bernanke once again as he delivers the second half of his semi-annual testimony, this time before the Senate. The prepared text ought to be effectively the same as yesterday’s remarks to the House of Representatives, but the Q&A session might generate some market-moving headlines. The Fed chief seemed particularly cautious not to introduce anything new into investors’ outlook yesterday however, and more of the same this time around seems probable. Deputies of G20 finance ministers and central bank governors are also due to hold preliminary meeting Moscow, but noteworthy news-flow is unlikely until their bosses arrive the following day to begin the summit in earnest.

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Asia Session:

GMT	CCY	EVENT	ACT	EXP	PREV
22:00	NZD	ANZ Job Advertisements (MoM) (JUN)	0.0%	-	-1.4%
0:00	AUD	Conference Board Leading Index (MAY)	0.0%	-	0.3%
1:00	NZD	ANZ Consumer Confidence Index (JUL)	119.8	-	123.9
1:00	NZD	ANZ Consumer Confidence (MoM) (JUL)	-3.3%	-	0.2%
1:30	AUD	NAB Business Confidence (2Q)	-1	-	2
1:30	AUD	RBA FX Transactions (A$) (JUN)	993M	-	490M
1:30	AUD	RBA FX Transactions Other (A$) (JUN)	24M	-	33M
1:30	AUD	RBA FX Transactions Govt. (A$) (JUN)	-977M	-	-515M
5:30	JPY	Nationwide Dept Store Sales (YoY) (JUN)	7.2%	-	2.6%
5:30	JPY	Tokyo Dept Store Sales (YoY) (JUN)	9.4%	-	5.1%

Euro Session:

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
-	-	G20 FinMin and CB Gov. Deputies’ Meeting	-	-	Medium
6:00	CHF	Trade Balance (CHF) (JUN)	2.73B (A)	2.12B	Medium
6:00	CHF	Exports (MoM) (JUN)	2.3% (A)	0.4%	Low
6:00	CHF	Imports (MoM) (JUN)	-3.2% (A)	2.6%	Low
8:00	EUR	Eurozone Current Account s.a. (€) (MAY)	-	19.5B	Low
8:00	EUR	Eurozone Current Account n.s.a. (€) (MAY)	-	15.3B	Low
8:30	GBP	Retail Sales ex Auto Fuel (MoM) (JUN)	0.2%	2.1%	Medium
8:30	GBP	Retail Sales ex Auto Fuel (YoY) (JUN)	1.6%	2.1%	Medium
8:30	GBP	Retail Sales w/ Auto Fuel (MoM) (JUN)	0.3%	2.1%	Low
8:30	GBP	Retail Sales w/ Auto Fuel (YoY) (JUN)	1.7%	1.9%	Low