FOREX: Dollar May Rise With Share Prices As US Economic Data Firms

By Ilya Spivak, Currency Strategist

Talking Points
  • Dollar to Rise Alongside Stocks on Another Batch of Firm US Data
  • Canadian Dollar Underperforms Before Manufacturing Sales Report
  • Yen Lower on Treasury Yield Outlook Following US Economic News

The US Dollar (ticker: USDollar ) was little changed in overnight trade as alackluster economic calendar and muted price action across Asianstock exchanges left currency markets without clear direction cues.The CanadianDollar narrowly underperformed, presumably ahead ofthe upcoming Manufacturing Sales report that is expected to showreceipts growth slowed for a second month in January. The Japanese Yen also traded a bit heavy before a large dollopof US economic data crosses the wires, where stronger outcomes mayput upward pressure on Treasury yields .

The relatively standstill appears likely tocarry forward into early European hours, with a small helping ofminor event risk on the docket unlikely to prove particularlymarket-moving. All eyes will be looking ahead to the US economicdata set , where expectations point to supportiveoutcomes. IndustrialProduction is forecast to rise 0.4 percent in Februaryafter a flat print in January, the University ofMichigan Consumer Confidence gauge is seen printing at the highest in 13months, and month-on-month CPI is expected to accelerate for a secondmonth.

Price action over the past week has been markedby an impossible-to-ignore breakdown in the inverse correlationbetween the US Dollar and share prices. Indeed, strong US economicdata has produced gains for the S&P 500 and the greenback alikeover recent sessions. This may reflect the impact of bettereconomic news on the Fed’s posture, with thisweek’s FOMC outing clearly demonstrating that Ben Bernanke andcompany are responding to signs of firming recovery by downgradingdovish rhetoric. On balance, this suggests the buck is likely toend the week on a firm note if economists’ expectations provetelling.

Asia Session : What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

5:00

JPY

Coincident Index (JAN F)

92.7

-

93.1

5:00

JPY

Leading Index (JAN F)

94.4

-

94.9

E uro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

9:00

EUR

Italian Trade Balance (Total) (€) (JAN)

-

1447M

Low

9:00

EUR

Italian Trade Balance EU (€) (JAN)

-

-577M

Low

10:00

EUR

Italian Current Account (€) (JAN)

-

402M

Low

10:00

EUR

Euro-Zone Trade Balance s.a. (€) (JAN)

-

7.5B

Low

10:00

EUR

Euro-Zone Trade Balance (€) (JAN)

1.0B

9.7B

Low

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.2952

1.3132

GBPUSD

1.5651

1.5797

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

To contact Ilya , e-mail ispivak@dailyfx.com . Follow Ilya 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 is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2012/03/16/FOREX_Dollar_May_Rise_with_Share_Prices_as_US_Economic_Data_Firms.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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