Dollar Rebuilds Inverse Stocks Link, Euro Looks To German Jobs Report

By Ilya Spivak, Currency Strategist

Talking Points
  • German Jobs Data Needs Downside Surprise to Materially Impact Euro
  • US Dollar Likely to Rise on Risk Aversion as Inverse Stocks Link Rebuilds
  • Fed Officials’ Commentary in Focus as Traders Refine Growth Outlook

GermanUnemployment figures headline the economic calendar inEuropean hours, with expectations calling for jobless ranks toshrink by 10,000 in March. The unemployment rate is expected toremain unchanged at a record-low 6.8 percent for a thirdconsecutive month. On balance, a print in line with or reasonablybetter than economists’ forecasts is unlikely to provematerially market-moving considering the labor market in theEurozone’s largest economy has steadily improving sinceSeptember 2009. Traders are likely to be highly sensitive to asignificant downside surprise however. This would suggest anemicperformance is filtering from the periphery of the currency blocinto its core, boosting the ECB rate cut outlook and weighing onthe Euro .

On the sentiment front, stock indexfutures tracking key European benchmarks are tradinguniformly lower in late Asian hours. Short-term correlation studiessuggest the US Dollar (ticker: USDollar ) has markedly rebuild its inverse correlationwith the MSCI World Stock Index over the past two weeks, hintingrisk aversion is likely to benefit the greenback. US economic dataflow remains a critical consideration on this front as investorsestablish their outlook for global growth in 2012 based on theperceived ability of a pickup in North America to offset a widelyexpected recession in Europe.

With this in mind, the spotlight will fall onthe Federal Reservespeaking calendar . Remarks from Atlanta Fed President DennisLockhart and Philadelphia Fed President CharlesPlosser ought to prove particularly interesting in thatthey will deal with hot-button issues for financial markets.Lockhart will discuss the impact of the Eurozone crisis on the USwhile Plosser will give his take on the outlook for economicgrowth. Fed Chairman Ben Bernanke will also deliver the last of hislectures on the central bank’s role in the 2008 crisis andbeyond at George Washington University .

The US economic calendar is relatively quiet. Aslight pickup to 350,000 on weekly Initial JoblessClaims will mean relatively little for the four-weekaverage and so will probably have relatively muted implications forprice action. Meanwhile, the Kansas City Fedmanufacturing activity gauge is forecast to remain unchanged in March fromthe eight-month high recorded in February. The final revisionof fourth-quarterGDP figures is also on tap, but absent wilddeviations from previously released numbers (a rather unlikelyoutcome) these numbers have long since factored into exchange ratesand so should not generate much fireworks.

Asia Session : What Happened

GMT

CCY

EVENT

ACT

EXP

PREV

23:50

JPY

Large Retailers' Sales (FEB)

0.2%

-0.3%

-1.2% (R-)

23:50

JPY

Retail Trade s.a. (MoM) (FEB)

2.0%

0.0%

3.1% (R-)

23:50

JPY

Retail Trade (YoY) (FEB)

3.5%

1.4%

1.8% (R-)

0:00

NZD

NBNZ Activity Outlook (MAR)

38.8

-

31.2

0:00

NZD

NBNZ Business Confidence (MAR)

33.8

-

28

0:30

AUD

Job Vacancies (FEB)

0.7%

-

-3.4% (R-)

E uro Session: What to Expect

GMT

CCY

EVENT

EXP

PREV

IMPACT

6:00

GBP

Nationwide House Prices (MoM) (MAR)

0.2%

0.6%

Medium

6:00

GBP

Nationwide House Prices (YoY) (MAR)

0.9%

0.9%

Medium

7:55

EUR

German Unemployment Rate s.a. (MAR)

6.8%

6.8%

Medium

7:55

EUR

German Unemployment Change (MAR)

-10K

0K

High

8:30

GBP

Net Lending Sec. on Dwellings (FEB)

1.4B

1.6B

Low

8:30

GBP

Mortgage Approvals (FEB)

57.2K

58.7K

Medium

8:30

GBP

Net Consumer Credit (JAN)

0.2B

0.1B

Low

8:30

GBP

M4 Money Supply (MoM) (FEB)

-

1.6%

Low

8:30

GBP

M4 Money Supply (YoY) (FEB)

-

-1.8%

Low

8:30

GBP

M4 Ex IOFCs 3M Annualised (FEB)

-

4.2%

Low

8:30

GBP

Index of Services (MoM) (JAN)

0.2%

0.2%

Low

8:30

GBP

Index of Services (3Mo3M) (JAN)

0.3%

0.0%

Low

9:00

EUR

Euro-Zone Business Climate Indicator (MAR)

-0.16

-0.18

Low

9:00

EUR

Euro-Zone Consumer Confidence (MAR F)

-19

-19

Medium

9:00

EUR

Euro-Zone Economic Confidence (MAR)

94.5

94.4

Low

9:00

EUR

Euro-Zone Industrial Confidence (MAR)

-5.8

-5.8

Low

9:00

EUR

Euro-Zone Services Confidence (MAR)

-0.8

-0.9

Low

Critical Levels

CCY

SUPPORT

RESISTANCE

EURUSD

1.3271

1.3420

GBPUSD

1.5832

1.6022

--- 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/2012/03/29/Dollar_Rebuilds_Inverse_Stocks_Link_Euro_Looks_to_German_Jobs_Report.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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