Intraday Market Thoughts

Dollar Crowned King, Abenomics 2.0 Awaited

by Adam Button
May 14, 2013 23:30

The US dollar soared Tuesday alongside the S&P 500. The dollar hit fresh recent highs against JPY, CHF, AUD and others. Japanese consumer confidence will be in focus in Asian trading as Abenomics spurs demand. 1 of 2 USDCAD hit all targets, the other awaits at 1.02. 1 of EURAUD hit all targets, the other awaits above 1.31. Both CADJPY remain in progress in the Premium Insights.

The dollar was relentless bid in US trading Tuesday and it was for no particular reason. A 1% rally in the S&P 500 encouraged optimism about the US economy but there was no unique catalyst on the day. The lone indicator on the day was the NFIB small business optimism survey. The reading of 92.1 was stronger than 90.3 expected but it still remains at the mid-point of the range for the past 3 years.

The euro climbed near 1.30 midway through US trading as Fitch upgraded Greece's credit rating but it stumbled afterwards, sliding as low as 1.2912.

USD/JPY also had a sharp turnaround; after touching 101.27 in Europe it marched to a four-year high of 102.42. The Swiss franc was especially battered as EUR/CHF broke 1.25 and USD/CHF climbed to the highest since August.

The focus will be on Japan in the hours ahead with the tertiary industry index at 2350 GMT and consumer confidence at 0500 GMT. The second release will be important because it could show a change in consumer attitudes following the BOJ moves in early April. The consensus estimate is 45.5 after a 44.8 reading in March.

Kyodo also reported that the Japanese government will announce a second set of growth strategies on Friday – Abenomics 2.0. At some point, stronger Japanese growth will attract investment and weigh on USD/JPY but that moment remains on the distant horizon.

Act Exp Prev GMT
Consumer Confidence Index (APR)
45.5 44.8 May 15 5:00
NFIB Small Business Optimism
92.1 89.8 89.5 May 14 11:30
Tertiary Industry Index (MAR) (m/m)
-0.6% 1.1% May 14 23:50

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