Tuesday, October 12, 2010
Previous session overview
The dollar declined slightly in thin trading Monday with negative sentiment amidst Federal Reserve stimulus concerns.
While expectations hadn't been high that finance ministers attending would come up with a plan for currency coordination at the International Monetary Fund's weekend meetings in Washington, the lack of encouraging news weighed on the greenback when global trading resumed Monday in Asia.
The worse-than-expected U.S. monthly employment report for September published Friday also hurt the dollar as bad U.S. data is seen as prompting the Fed to take further steps to prod the economy's performance.
The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, continued to trade at lows last seen in January. But with Japanese and Canadian markets closed Monday due to national holidays and the U.S. bond market observing Columbus Day, trading is expected to be light through North American trading.
The dollar retraced losses against the euro after the pair hit above USD1.40 in Asian trading minus Japan. The dollar came back slightly against the yen after hitting a new 15-year-low of JPY81.37, with investors alert for the possibility of Japanese government intervention in currency markets.
Market expectation
All currencies now have net long positions versus the U.S. dollar, with bets against the dollar at USD35.3 billion, the highest level since December 2009, according to analysts.
With world leaders downplaying talk of "currency wars" over the weekend, the dollar negative dynamic remains in place at the start of this week, said analysts.
Short of any moves on a world stage, Federal Reserve's likely initiation of dollar devaluing asset-purchasing remains the single most significant dynamic in the currency markets.
Until those key dates, the euro and the yen should continue to benefit, said analysts.
The dollar dipped earlier to JPY81.37, which is the current low for the downtrend from the August 1998 high of JPY147.71. It's going for monthly support at JPY77.59. But a move above JPY82.13 would be the signal for a move up to JPY84.86.
Most important events of the day
| Oct 11 | Count. | Event | For | Unit | Imp. | Act. | Cons. | Prev. |
|---|---|---|---|---|---|---|---|---|
| 00:00 |  JP | Market Holiday- Sports Day |  | |||||
| 00:00 |  US | Market Holiday- Columbus Day (Nyse, Amex and NASDAQ open) | | |||||
| 00:00 |  CA | Market Holiday- Thanksgiving Day | | |||||
| 00:00 |  GB | BoE Deputy Governor Tucker speaks at the Institute of International Bankers | | |||||
| 00:00 |  SE | Governor Ingves speaks on "How the Riksbank handled the financial crisis" | | |||||
| 00:00 | GB | BoE Governor King speaks at the Caplin Conference in Washington | | |||||
| 06:45 |  FR | Manufacturing Production | Aug | % m/m | | 0.4 | 1.2 | |
| 06:45 | FR | Manufacturing Production | Aug | % y/y | | 4.4 | 3.7 | 5.5 |
| 07:30 |  DK | CPI | Sep | % y/y | | 2.6 | 2.3 | |
| 07:30 | DK | HICP | Sep | % m/m | | 0.4 | 0.5 | |
| 07:30 | DK | HICP | Sep | % y/y | | 2.5 | 2.3 | |
| 07:30 | DK | CPI | Sep | % m/m | | 0.4 | 0.3 | |
| 12:00 | US | Federal Reserve Bank of New York President Dudley speaks at the Institute of International Bankers Breakfast | | |||||
| 13:00 | SE | Deputy Governor Ekholm comments on research report "Europe and Global Imbalances" | | |||||
| 18:45 | US | Federal Reserve Bank of San Fransisco President Yellen gives speech on "Macroprudential Supervision and Monetary Policy in the post crisis world" | | |||||
| 23:01 | GB | BRC Retail Sales Monitor | Sep | % y/y | | 2.8 |
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