Dollar hedges lower as investors are cautious ahead of US economic data due this week. Market is anticipating softer Durables Goods Orders in January and a sharp downward revision to 4Q economic growth figures. Soft economic data in the US this week would likely strengthen the argument of analysts expecting the Federal Reserve to cut the Fed Funds rate from 5.25% this year in order to fight a slowing economy. Strategists are warning about some risk for the Dollar following those releases and Dealers already said the Dollar lost some support on Monday as trading volumes were much lower than usual.
News and Events:
The Dollar slipped on Monday against the Yen and the Euro on expectations that US data this week could support the case for an interest rate cut by the Federal Reserve. Investors are cautious ahead of US economic data due this week, which is expected to show softer Durables Goods Orders in January and a sharp downward revision to 4Q economic growth figures. Soft economic data in the US this week would likely strengthen the argument of analysts expecting the Federal Reserve to cut the Fed Funds rate from 5.25% this year in order to fight a slowing economy. US Durable Goods, Existing Home Sales and Consumer Confidence data are all due on Tuesday, followed by fourth-quarter Gross Domestic Product data and New Home Sales on Wednesday and a closely watched Manufacturing Survey from the Institute for Supply Management on Thursday. In addition, Personal Income and Consumption will be release on Thursday, followed by Friday's Final Consumer Sentiment reading for February from the University of Michigan survey of Consumers. Strategists are warning about some risk for the Dollar following those releases and Dealers already said the Dollar lost some support on Monday as trading volumes were much lower than usual.
UsdJpy declined -0.34% to 120.66 correcting from last week peak 121.64. EurUsd rose 0.21% to 1.3194 after rising near 1.3200, its highest since early January. EurJpy slipped -0.14% at 159.18 correcting from record high 159.65 hit last week. UsdChf went down -0.28% at 1.2293, it's lowest since early January.
NzdUsd made a strong advance up 0.54% at 0.7105, slightly lower from intraday high 0.7124. New Zealand rose to a 14-month high driven by expectations that Reserve Bank of New Zealand will keep raising interest rates from an already highest level in the Industrialized world.
Today's Key Issues:
Euro 9:00 GMT: January Euro-zone M3 seasonally adjusted expected 9.1% to 9.8% vs 9.7% (YoY) and 9.5% vs 9.2% (3months avg)
UK 9:30 GMT: January BBA Mortgage Approvals expected 40k vs 45.5k
US 13:30 GMT: January Durable Goods orders expected -2.5% vs 2.9% and -0.2% vs 2.7% excluding transportation
US 15:00 GMT: February Consumer Confidence 105 to 111 vs 110.3
US 15:00 GMT: January Existing Home sales expected 6.24M vs 6.22M or 0.3% vs -0.8% (MoM)
NZD 21:45 GMT: January Building Permits previously -4.9% (MoM)
Euro 23:00 GMT: ECB's Trichet speaks in Brussels
Euro 23:00 GMT: January French Unemployment change expected -20k vs -22k and Unemployment rate unchanged at 8.6%
Jpn 23:50 GMT: January Industrial Production expected -1.9% vs 0.9% (MoM), January Large Retailers' sales -0.8% vs -2.4% and January Retail trade 0.2% vs -0.2% (YoY).
The Risk Today:
EurUsd outlook remains constructive with strong support at 1.3074 where a break is required to undermine the bull trend. Until then market looks at 1.3250 (76.4% retracement of the 1.3368-1.2865 decline). Next target is 1.3290 trendline resistance. Sentiment remains positive above 1.3074; failure to maintain this level would unlock 1.2990 (61.8% retracement of the 1.2865 to 1.3191 advance).
GbpUsd remains in 1.9403 – 1.9750 trading for the past couple of weeks. Only a breakout from this range would mark the next key directional trend. A break of 1.9750 resistance (61.8% retracement of the 1.9917-1.9482 decline) is required to confirm the return of the bull trend.
UsdJpy has pulled back from recent high range resistances 122.10 – 122.38; pushing through initial support 120.82. This opens the door for a run toward 120.00 (61.8% retracement of the 118.98 to 121.65 advance) and 119.90 former resistance. Further losses would expose 118 support.
UsdChf still under pressure maintains a bearish tone. As 1.2310 has been broken; the focus is now on the 1.2276 next support where a break would open door toward 1.21.45 (61.8% retracement of the 1.1879-1.2575 rise). Initial resistance is at 1.2334.