The Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) is slightly lower on the day as the rest of the majors outside the Japanese Yen have started to claw back the prior two week’s losses, although any such bearish price action exhibited by the US Dollar is largely seen as an opportunity to get long. The three safe havens – the Swiss Franc, the US Dollar, and the Yen – are trailing overall, while the commodity currencies – the Australian, Canadian, and New Zealand Dollars – are among the top performers amid relatively calm beginning of the week, of the month (July), and of the quarter (3Q’13) flows, typically a more volatile period.
Accordingly, today’s price action is very indicative of only a modest desire for risky assets, despite stronger than expected data from the Euro-Zone and the United Kingdom. Notably, peripheral PMI Manufacturing surveys (Italian and Spanish) for June outperformed, as did the UK’s PMI Manufacturing report; the EURUSD climbed above $1.3050 on the news while the GBPUSD retook $1.5200. Whether or not the early-week bullish price action in the European currencies can be sustained through the week’s close is in question, given the significant overhang of the Bank of England Rate Decision, the European Central Bank Rate Decision, and the June US labor market report, all of which are due between Thursday and Friday.
Looking ahead to the North American calendar today (see more below), the US ISM Manufacturing (JUN) report should generate significant interest despite a very meager print expected. While manufacturing activity hasn’t been the cog to strong American growth in several decades, strength in this sector implies a healthier economy in general, and therefore, the print will be important insofar as it will set sentiment for the US Dollar in the days leading up to the June labor market report.
Taking a look at European credit, another bout of strength in peripheral debt has afforded the Euro room to rally on Monday, particularly against the Japanese Yen (the EURJPY tracks short-term peripheral debt closely). The Italian 2-year note yield has decreased to 1.853% (-6.6-bps) while the Spanish 2-year note yield has decreased to 2.126% (-7.7-bps). Similarly, the Italian 10-year note yield has decreased to 4.492% (-4.8-bps) while the Spanish 10-year note yield has decreased to 4.638% (-11.1-bps); lower yields imply higher prices.
RELATIVE PERFORMANCE (versus USD): 10:45 GMT
AUD: +0.57%
NZD: +0.52%
EUR: +0.31%
GBP:+0.07%
CAD:+0.31%
CHF:+0.01%
JPY:-0.47%
Dow Jones FXCM Dollar Index (Ticker: USDOLLAR): -0.20% (+1.04% prior 5-days)
ECONOMIC CALENDAR
Source: http://dld.bz/cGbY6
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