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Consumer Confidence to Threaten US Dollar Rally
Written by article default Tuesday, 28 June 2011 08:17
The greenback was firmer at the close of North American trade with Dow Jones FXCM Dollar Index (Ticker: USDollar) climbing a modest 0.08% for a 75.07% move of its daily average true range. The gains come on the back of a rebound in equities that saw the Dow, the S&P 500, and the NASDAQ close higher by 0.91%, 0.92%, and 1.33% respectively. Commodities remained on the defensive however with crude and gold in the red for the day. Although market sentiment saw some risk-taking creep in, traders remain cautiously optimistic ahead of Wednesday’s Greek austerity vote. A daily chart sees the US dollar index encountering resistance at the 100-day moving average, capping the day’s gains.
A 60-minute chart sees the index remaining within the ascending channel dating back to the start of June. Interim support rests at 9700 with subsequent floors seen at the 23.6% Fibonacci retracement of the May advance around 9660 followed closely by the lower bound trendline. The dollar may see some weakness in the interim as it pushes against the 100-day moving average, currently at 9706. A topside break eyes targets 0.9730, backed by the May 23rd high at 9760 and the 9800 level.
A look at the component currencies sees the dollar advancing against the yen and the aussie while the euro surged 0.70% on optimism that Greece will be able to pass and implement the measures needed to secure IMF/EU aid. Also aiding the euro’s run were comments made by President Nicolas Sarkozy who suggested that French banks were working on a possible 70% rollover of Greek debt. The euro’s gains are likely to be tempered however as trader’s eye a slim margin vote on Wednesday where Prime Minister Papandreou will attempt to gain enough support pass a 5-year austerity plan signed off on by EU inspectors. The yen was the biggest loser against the reserve currency today, sliding 0.60% as traders unwound haven flows put in last week amid plummeting stock and commodity prices.
Tomorrow traders get an update on the housing market with the Case-Shiller home price index and the Richmond Fed Manufacturing index. Event risk for the dollar mounts with June consumer confidence print data at 14:00GMT. Consensus estimates call for a print of 61.0, slightly up from a previous read of 60.8. With the end of QE2 now just days away, traders will be closely eyeing the confidence print for a gauge of future consumer spending and consumption. The data has the ability to greatly weigh on market sentiment with a weak print.
Upcoming Events
|
Country |
Date |
GMT |
Importance |
Release |
Expected |
Prior |
|
US |
6/28 |
13:00 |
LOW |
S&P/Case-Shiller Composite-20 s.a. (MoM) (APR) |
-0.2% |
-0.2% |
|
US |
6/28 |
13:00 |
LOW |
S&P/Case-Shiller Composite-20 (YoY) (APR) |
-4.0% |
-3.6% |
|
US |
6/28 |
13:00 |
LOW |
S&P/Case-Shiller Home Price Index (APR) |
- |
138.16 |
|
US |
6/28 |
14:00 |
HIGH |
Consumer Confidence (JUN) |
61.0 |
60.8 |
|
US |
6/28 |
14:00 |
LOW |
Richmond Fed Manufacturing Index (JUN) |
-2 |
-6 |
|
US |
6/28 |
16:00 |
LOW |
Fed's Richard Fisher Speaks on U.S. Economy |
- |
- |
Written by Michael Boutros, Currency Analyst for DailyFX.com
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