FOREX: US Dollar to Pull Back on Waning Safe-Haven Demand

Jun 13, Mon 14:31 - Source : DailyFX.com

Overnight Headlines

NZ Dollar Slumps as Earthquake Weighs on Rate Hike Bets Canadian, Aussie Dollars Gain on Chinese Monetary Data

Critical Levels

CCY	SUPPORT	RESISTANCE
EURUSD	1.4263	1.4491
GBPUSD	1.6169	1.6442

The Euro was little changed overnight, tracking sideways in a choppy range above 1.43 to the US Dollar. Likewise, the British Pound consolidated below 1.6250 to the greenback. We continue to look for EURUSD selling opportunities and have entered long USDCAD as a risk aversion play.

Euro Session: What to Expect

GMT	CCY	EVENT	EXP	PREV	IMPACT
8:00	EUR	Italian Industrial Production s.a. (MoM) (APR)	0.2%	0.4%	Low
8:00	EUR	Italian Industrial Production w.d.a. (YoY) (APR)	2.4%	3.1%	Low
8:00	EUR	Italian Industrial Production n.s.a. (YoY) (APR)	2.0%	0.8%	Low

The economic calendar is of little significance on Monday with no market-moving data set cross the wires in Europe or the US, paving the way for sentiment trends to dominate as the key driver of currency market price action. With that in mind, S&P 500 stock index futures are pushing higher, hinting at swelling risk appetite on Monday and pointing the way lower for the safe-haven US Dollar.

The reversal’s staying power is suspect however, with current price action representing a correction amid a lull in headline event risk after heavy selling over the preceding two weeks. Indeed, fears of global economic slowdown in the second half of the year no less significant, with sellers poised to find a new reason to push risky assets lower with the US expected to report the first decline in Retail Sales in 11 months on Tuesday.

Asia Session: What Happened

GMT	CCY	EVENT	ACT	EXP	PREV
23:50	JPY	Machine Orders (MoM) (APR)	-3.3%	1.7%	1.0%
23:50	JPY	Machine Orders (YoY) (APR)	-0.2%	4.9%	9.1%
2:00	CNY	New Yuan Loans (MAY)	551.6B	650.0B	739.6B
2:00	CNY	Money Supply - M0 (YoY) (MAY)	15.4%	-	14.7%
2:00	CNY	Money Supply - M1 (YoY) (MAY)	12.7%	13.7%	12.9%
2:00	CNY	Money Supply - M2 (YoY) (MAY)	15.1%	15.5%	15.3%
3:00	NZD	REINZ Housing Price Index (MAY)	3186.2	-	3245.4
3:00	NZD	REINZ Housing Price Index (MoM) (MAY)	-1.8%	-	1.1%
3:00	NZD	REINZ Housing Price Index (YoY) (MAY)	10.8%	-	-4.2%

The New Zealand Dollar slumped in overnight trade - down against all of its major counterparts – after a magnitude 5.5 earthquake struck the city of Christchurch just four months since a 6.3-level tremor wounded the city. That quake spurred the Reserve Bank of New Zealand to cut benchmark interest rates by 50 basis points to bolster the economy through the rebuilding effort, and traders speculated that today’s disaster would bring more of the same.

Meanwhile, the Canadian and Australian Dollars outperformed after China’s New Yuan Loans unexpectedly tumbled to 551.6 billion in May while growth in the broadest measure of the Money Supply (M2) slowed more than forecast, raising hopes that Beijing may relax its heretofore aggressive drive to slow the economy to rein in inflation. China is the world’s second-largest economy and a key importer of commodities so a reduced need to further restrict monetary conditions offered an understandable lift to the currencies of raw materials exporters.

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