Forex: Dollar Corrects Higher, All Eyes on Jobs Data for Follow-Through

2013-10-21 09:44:00

Ilya Spivak, Head Strategist, APAC

Talking Points

US Dollar Recovers Amid Correction Following Last Week’s Selloff
Yen Underperformed on Fading Safe-Haven Demand as Nikkei Rose
All Eyes on Tuesday’s US Jobs Data as Markets Time QE “Taper”

The US Dollar launched a corrective recovery to start the trading week, rising as much as 0.2 percent on average against its leading counterparts. The move likely reflects corrective profit-taking in the wake of last week’s explosive selloff in the wake of a Congressional deal to end the US government shutdown and lift the so-called “debt ceiling”. The Japanese Yen underperformed, dropping as much as 0.5 percent against the US unit amid fading haven demand as the Nikkei 225 advanced.

That decline itself was probably driven by profit-taking: most market participants likely expected a deal to be struck because the alternative (a US default) appeared unthinkable given the greenback’s status as the global reserve currency. After the accord was in place, uncertainty flared up anew as the spotlight turned to a two-week backlog of US economic data. With this in mind, a relatively quiet calendar in European and North American trading hours is likely to see investors looking ahead to Tuesday’s release of September’s US Employment report.

Although the data is dated in that it won’t reflect the shutdown’s impact, it will help establish a baseline to gauge how ready to act the Fed had been going into October. Supportive news-flow hinting at a modest delay to the “tapering” process stands to boost the US Dollar against most of the majors. A soft outing that suggests the case for a near-term stimulus reduction was already precarious before October’s budget fiasco stands to have the opposite effect.

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Asia Session:

GMT	CCY	EVENT	ACT	EXP	PREV
21:45	NZD	Net Migration s.a. (SEP)	2740	-	2160
23:01	GBP	Rightmove House Prices (MoM) (OCT)	2.8%	-	-1.5%
23:01	GBP	Rightmove House Prices (YoY) (OCT)	3.8%	-	4.5%
23:50	JPY	Total Trade Balance (¥) (SEP)	-932.1B	-918.6B	-962.8B
23:50	JPY	Adjusted Trade Balance (¥) (SEP)	-1091.3B	-1127.4B	-820.8B
23:50	JPY	Exports (YoY) (SEP)	11.5%	15.6%	14.6%
23:50	JPY	Imports (YoY) (SEP)	16.5%	19.9%	16.0%
2:00	NZD	Credit Card Spending (YoY) (SEP)	5.2%	-	6.6%
2:00	NZD	Credit Card Spending (MoM) (SEP)	-0.1%	-	1.2%
4:30	JPY	All Industry Activity Index (MoM)	0.3%	0.2%	0.4%
5:00	JPY	Supermarket Sales (YoY) (AUG)	0.4%	-	0.1%
5:00	JPY	Leading Index (AUG F)	106.8	-	106.5
5:00	JPY	Coincident Index (AUG F)	107.6	-	107.6

Euro Session:

GMT	CCY	EVENT	EXP/ACT	PREV	IMPACT
6:00	EUR	German Producer Prices (MoM) (SEP)	0.3% (A)	-0.1%	Low
6:00	EUR	German Producer Prices (YoY) (SEP)	-0.5% (A)	-0.5%	Low
7:00	CHF	Money Supply M3 (YoY) (SEP)	9.7% (A)	10.5%	Low
7:00	JPY	Convenience Store Sales (YoY) (SEP)	-1.6% (A)	-1.4%	Low
9:00	EUR	Eurozone Gov't Debt/GDP Ratio (2012)	90.6% (A)	90.6%	Low
10:00	EUR	Germany's Bundesbank Monthly Report	-	-	Low