2013-06-25 02:25 GMT

Will Fed Speeches Halt the Dollar Rally?

Based on the sell-off in global equities and rise in bond yields around the world, deleveraging in the financial markets intensified. However in the forex market, the U.S. dollar appears to have stabilized. Early losses for many major currencies against the dollar were recovered by the end of the day. In fact, the AUD/USD even ended the North American trading session in positive territory. Does this mean that the dollar rally has peaked? No. There were no fundamental drivers behind the reversal in the greenback outside of exhaustion. U.S. stocks continued to decline, extending losses that began at the end of May. While the S&P 500 is still up more than 11% year to date, it lost 6% of its value since setting a record high of 1,669.16 on May 21st. With 1,500 in sight more losses are likely for the S&P 500 and additional weakness in equities is a reflection of risk aversion, which could lead to further strength for the greenback.

There are a number of U.S. economic reports on the calendar this week but none of the data is expected to significantly alter the market's expectations for Fed policy. Instead, everyone's focus should be on all of the Federal Reserve Presidents scheduled to speak. At least U.S. 10 policymakers will be talking about the economy and monetary policy but only 3 (Dudley, Powell and Stein) are voting members of the FOMC this year. We will be listening to these speeches closely to hear if these Fed Presidents are less supportive of tapering asset purchases this year than the Fed Chairman. Given how quickly and aggressively the dollar has rallied, a turnaround could occur if any of the 3 FOMC voters express skepticism or reservations about Bernanke's timing on reducing asset purchases. Remember, the decision to taper is subject to a vote by the current members of the FOMC. What we know is that Fed President Fisher, who is not a FOMC voter said a significant majority backed Bernanke's more optimistic tone last week. No major U.S. economic reports were released today but tomorrow we have durable goods, the S&P CS house price index, the Richmond Fed manufacturing survey, consumer confidence and new home sales. Of these reports, we feel that consumer confidence will be the most important because it is a leading indicator for U.S. economic activity.-FXstreet.com

2013-06-25 08:30 GMT

UK. BBA Mortgage Approvals (May)

2013-06-25 12:30 GMT

USA. Durable Goods Orders (May)

2013-06-25 13:00 GMT

USA. Housing Price Index (MoM) (May)

2013-06-25 14:00 GMT

USA. New Home Sales (MoM) (May)

2013-06-25 02:02 GMT

USD/JPY retesting 98.00 as Nikkei jumps 1%

2013-06-25 01:13 GMT

AUD/USD well supported by 0.9250, 1h EMA

2013-06-25 01:01 GMT

GBP/JPY struggling around the 151.00 handle

2013-06-25 00:21 GMT

EUR/JPY structurally bearish, above 128.40 sees relief