Daily Economic Commentary: United States

[PipDiddy]

I betcha the dollar didn’t wake up today feeling like Pip Diddy as risk appetite made the market tik tok yesterday. Ha! It lost 32 pips against the euro and 107 pips against the pound. USDJPY was able to close 14 pips higher at 83.91, but the pair first dipped to its new 15-year low at 83.34 during the European session. Ouch!

A probable reason why USDJPY was able to end the day with a gain was because consumer credit only declined by 3.6 billion USD in July and the market had been expecting a 4.2 billion USD decline. Yipee!

Another one could be because of the Federal Reserve who took the dollar’s center stage yesterday. It released its Beige Book report which concluded that the overall economic activity is cooling but not all states are experiencing a slowdown.

I guess you can say that the dollar’s hustle against the yen during the New York session was because traders were looking at the glass half full rather than half empty. Or then again, maybe they were just desperate for USDJPY to retrace before they start selling the pair again. Hmm…

Anyway, Minneapolis Fed President Narayan Kocherlakota also spoke about the economy. He said that he is concerned about the labor market and that he expects the unemployment rate to go beyond 8% in 2012. Uh oh, that can’t be good. I wonder if this will affect the dollar in today’s trading along with the economic reports we have on tap.

Later today at 12:30 pm GMT, we have trade balance data and it is expected that imports outpaced exports by 47 billion USD in July, which is better than the 49 billion USD deficit in June. Along with that we also have the unemployment claims report for last week. The number of people who filed for unemployment benefits is seen to have decreased by 2,000 to 470,000 from its previous reading.

There’s a chance that the trade balance report will be positive given the pick-up in manufacturing activity. However, if the unemployment report comes in worse than expected, we may just the dollar pare its gains against the yen. Good luck with your trades and may the pips be with ya!

[PipDiddy]

After a hip eenie-meenie-miney moe number on the dollar, the bulls and bears decided to leave the currency virtually unchanged against its major counterparts yesterday. USDJPY capped the day only 8 pips lower than its open price at 83.83. Meanwhile, EURUSD called it quits at 1.2705 after tapping an intraday high of 1.2767.

The traders must have enjoyed the fancy beats of the US economic reports. Falling imports and rising exports narrowed the US trade deficit down to 42.8 billion USD. Now that’s definitely more awesome than June’s 48.9 billion USD figure! And to think that the analysts only pegged the figure at 47.4 billion USD. Tsk tsk.

The dollar bulls also got giddy when this week’s unemployment claims dropped to 451,000. Okay, so maybe nine states forgot to file their claims on a Labor Day holiday, but hey, a drop is a drop, right?

Aside from July’s wholesale inventories report at 2:00 pm GMT, no other major economic reports will be setting the tune for the dollar today. But keep your eyes open for any announcement or report that could shift the sentiment on the dollar! Those dollar bears just might strike when you least expect it…

[PipDiddy]

Judging by the mixed results the USD got on the charts last Friday, it seems like investors couldn’t agree on a single verdict for the currency… Unlike the movie “The Last Airbender,” which I think we can all agree was a total flop! EURUSD was practically unchanged from its opening price of 1.2705, USDJPY rose 38 pips to 84.20, and GBPUSD dropped 19 pips to close at 1.5358.

We’re usually used to seeing the US dictate market movements for the other currencies, but we saw the tables turn last Friday. Instead, the USD found itself reacting to foreign developments. Perhaps that’s what caused the USD’s varied reviews.

Worry not, though! The US will be back in business this week with a truckload of reports to give you your US data fix!

The first high-impact report coming our way is the retail sales report, which is slated to show a 0.3% uptick in August following the 0.4% increase in July. Catch it tomorrow at 12:30 pm GMT!

The action picks up on Thursday when the US unloads four hard-hitting releases.

First off is the monthly PPI report which is due at 12:30 pm GMT. August is expected to post a 0.3% increase in producer prices after July recorded a 0.2% uptick.

At the same time, the weekly unemployment claims data will be available. Will we see an improvement from the previous week’s 451,000 claims? Better yet, let’s put analysts’ forecasting abilities to the test and see if they were right in saying 460,000 people filed for unemployment insurance last week.

Then at 1:00 pm GMT, the TIC long-term purchases figures is scheduled to be unveiled. The balance of domestic and foreign investment is expected to shrink from 44.4 billion USD to 37.9 billion USD in July. Investors usually react bearishly to low figures, so watch out for worse-than-expected results!

The last report due Thursday is the Philly Fed manufacturing index, which measures conditions in the manufacturing sector of Philadelphia, New Jersey, and Delaware. Last month posted an awful reading of -7.7, but this month, analysts say the reading will pick up to 0.5.

Friday gives us a couple of notable reports, too. For one, the CPI report is due at 12:30 pm GMT and is expected to show that prices increased by 0.3% August as it did in July.

Minutes after that, at 1:55 pm GMT, the University of Michigan’s consumer sentiment data will be available. After posting a 68.9 in August, the report is expected to print a reading of 70.3 in September.

As usual, keep your eyes peeled for better-than-expected figures than can help the USD combat its safe haven rivals! Stay safe, guys!

[PipDiddy]

The dollar seemed more out of place in yesterday’s trading than Russell Brand was in hosting the VMAs. It lost against all of its major counterparts giving up the most against the euro with 144 pips and the Swissy with 124 pips. USDJPY also closed 66 pips lower at 83.66. Tsk, tsk.

Risk appetite kept the dollar from gaining against its higher-yielding counterparts, thanks to better-than-expected industrial production figures from China. It was reported last Saturday that the Asian superpower’s industrial sector expanded at an annual rate 13.9% in August which overshot the market’s 13.1% forecast. There was also the upbeat economic outlook of the European Commission which may have helped ease concerns on Europe’s financial crisis.

The sharp increase in US bond yields which tapped its one-month high last week, might have been the dollar’s kryptonite against the yen. How? Well, higher bond yields usually make the yen more attractive than the dollar to use as a funding currency.

A handful of analysts are expecting that the dollar will be able to post gains against its safe-haven counterparts today with the retail sales report. Due at 12:30 pm GMT, the retail sales figure for August is seen to come in at 0.3%. Core retail sales, which exclude automobile purchases by consumers, is seen to have increased by 0.2% to 0.4% during the month. These giddy analysts are expecting the actual figures to wow the market because they think that discounts given by retailers were much higher in August than in July. I think my buddy Forex Gump mentioned this in his blog yesterday. However, if they’re wrong, the dollar could be in for more bear attacks. Yikes!

We also have the IBD consumer optimism index for September at 2:00 pm GMT. It is eyed at 44.0 implying that the general sentiment of American consumer is improving. Along with that, we also have the business inventories report for July on tap. A figure lower than the 0.5% consensus will probably be good for the dollar as this would indicate future corporate spending as companies spend to stock up their inventories.

Good luck and happy trading!

[PipDiddy]

Despite the better-than-expected results on the US retail sales report, the Greenback still turned out to be the biggest loser in yesterday’s trading session. It lost a huge amount of pips against all major currencies (yes, even versus the yen and the franc). EURUSD found itself rallying above the 1.3000 handle, USDCHF dropped below parity, while USDJPY fell to new 15-year lows.

Apparently, the Greenback was broadly sold-off on the news that the Fed could announce its second round of quantitative easing as early as November. In addition, word on the grapevine is that China could let its currency appreciate against the Greenback at a wider band against the dollar to avoid US trade sanctions. Surprise, surprise!

For today, there are two important economic reports from the US that the market will focus on.

The first one, the Empire State Survey, will come out at 12:30 pm GMT. The survey is predicted to print a reading of 8 for this month, up the 7.1 reading seen the previous month. The second one is the industrial production report. Scheduled to come out at 1:15 pm GMT, industrial production is predicted to have climbed by 0.2% in August, slightly lower than the 1.0% rise in July. Given how weak the Greenback has been, we could see traders use the reports as a catalyst for another sell-off.

[PipDiddy]

After its huge losses last Tuesday, the dollar decided to just chill within the ranges yesterday. Save against the yen, the dollar mostly moved sideways across the board, with EURUSD ending the US trading session barely changed at 1.3013 from its Asian session opening price of 1.3008. GBPUSD followed suit and closed a mere 60 pips higher from its opening price.

It looks like the weaker-than-expected data that were released yesterday tamed risk appetite.

The Empire State manufacturing survey for September came in below expectations at 4.1 (the forecast was a reading of 8). The reading was also significantly below August’s 7.1. Meanwhile, the report on industrial production showed a measly rise of 0.2% for August, a third of the 0.6% increase (revised down from 1.0%) seen in July.

Will we begin to see the dollar retrace some of its losses? Hah, be careful folks, bear mojo is still pretty strong, as they are just probably lurking on the sidelines waiting for some sort of catalyst to make their move! With the huge amount of economic reports scheduled to be released, the catalyst may come sooner than you think!

At 12:30 pm GMT, the economic calendar presents a buffet of news releases to choose from. There are producer price index (0.3% forecast, 0.2% previous), the weekly unemployment claims (463K forecast, 451,000 previous), and the current account balance (-124 billion USD deficit forecast, -109 billion deficit USD deficit previous).

Then, come 1:00 pm GMT, we will see the Treasury International Capital System Flows. The report measures the difference between foreign long-term securities purchased by US citizens and US long-term securities purchased by foreigners. It is predicted to show a surplus of 47.5 billion USD for July, up from the 44.4 billion USD surplus from the month before.

Lastly, at 2:00 pm GMT, the Philadelphia Fed Survey will come out. A reading of 0.3 is expected for this month, an improvement from the -7.7 figure seen in August.

So there ya have it folks! There are a number of data that could trigger another dollar sell-off, so be vigilant!

[PipDiddy]

Boy did the Greenback bring sexy back against its low-yielding counterparts in yesterday’s trading! After USDJPY dipped to an intraday low of 85.23, the dollar put its muscle on a hustle and closed with a 9-pip gain at 85.83. Against the Swissy, it ripped a 122-pip win as the dollar bulls settled USDCHF at 1.0158 to end the day. Oh yeah!

Good thing yesterday’s roster of economic reports was awesome enough for investors to run after the dollar instead of the other safe-haven currencies. However, it wasn’t all good because EURUSD closed higher at 1.3078, giving the dollar a 67-pip loss.

Let’s take a look at what we had on tap yesterday, shall we?

The only piece of bad news that we got was the Philadelphia Fed Survey with its index for September printing a 0.7 decline and missing the 0.9 growth forecast. Yikes! I guess this means that manufacturers in Philly don’t see themselves smilin’ much at their business reports anytime soon, huh?

On the brighter side of things, the PPI report showed that inflation picked up in August. It came in at 0.4%, and beat both the 0.3% consensus and the 0.2% reading in July. Boo yeah! Then there was the unemployment claims figures for last week that printed at 450,000. It came as a pleasant surprise to the market as it had been bracing for an increase of 5,000 at 458,000 from its previous reading.

We also saw that the current account deficit grew 123.3 billion USD during the second quarter from a 109.2 billion USD shortfall in the first. But then again, it was still better than the market’s forecast which was a 125 billion USD deficit. So I guess that’s a good thing, right?

To put the cherry on top of the sundae that is the dollar’s list of good news was the TIC Long-Term Purchases report. It showed that foreigners bought the most dollar-denominated assets since September 2009, valuing at 61.2 billion USD in this July. That was stellar news considering that the market had only expected a modest increase at 47.5 billion USD to follow July’s 44.4 billion USD reading.

Oh yeah before I forget, Treasury Secretary Timothy Geithner also spoke yesterday. He said that he will get his homies in the G20 hood to convince China to strengthen the yuan. The US has been trying to do this for a while now because the weak yuan is taking a toll on the competitiveness of American workers. Let’s see if Geithner can finally pull this off in November when the G20 meets in Seoul.

Anyway, today we have the CPI figure for August which is seen to have remained flat at 0.3%. Given the uptick in PPI that we saw yesterday, there’s a good chance that we could be in for another pleasant surprise for the dollar. Boo yeah! We also have the University of Michigan Consumer Sentiment report at 1:55 pm GMT. Analysts are expecting to see some optimism in September with the forecast higher at 70.2 than August’s 68.9 reading.

Be sure to watch out for this reports later before you head out to the club! Have a great weekend ahead guys!

[PipDiddy]

The dollar’s scorecard for Friday was as mixed as the reviews for the latest Universal Pictures flick, Devil. It was able to spook 41 pips from the euro as the bears hustled EURUSD from an intraday high of 1.3159 to its close at 1.3038. However, it was unable to nudge pips from the yen as USDJPY ended its 34-pip range 4 pips lower at 85.80. Against the Swissy, it took a 52-pip loss as USDCHF closed the week at 1.0098.

Perhaps it was risk aversion that convinced traders to give the dollar thumbs ups against its higher-yielding counterparts. On the other hand, I’m guessing it was the not-so-stellar economic reports that got it a Rotten Piptatoes review against its safe haven counterparts. Let’s take a look at them, shall we?

Last Friday we saw that the CPI for August came in as expected at 0.3%. The core CPI, which excludes volatile items such as food and energy, remained unchanged during the month but fell short of the 0.1% expectation of the market, following July’s 0.1% increase in July. This may have frustrated a few traders because the better-than-expected PPI figures released earlier last week might have gotten their hopes up.

Then, the shock to the heart of the dollar bulls came with the University of Michigan consumer sentiment report. The index for September printed at 66.6 following its 68.9 reading in August. Just how bad was this? Well, aside from missing the 70.0 consensus, it also translates to its lowest reading since August 2009! Yikes!

Today we only have the results of the NAHB Builders Survey at 2:00 pm GMT. Analysts are expecting an increase to 14.0 in September from August’s 13.0 reading. You may want to keep tabs on this report as it could set the tone for the string of housing reports we have for tomorrow.

Let’s see what we’re in for on Tuesday. Well, at 12:30 pm GMT we have the building permits figures for August which is seen to print at 56,000. Along with that, we also have the number of housing starts for the month which is forecasted at 55,000.

Then at 6:15 pm GMT, we have the FOMC interest rate decision. Yeah, it’s a no-brainer that the Fed Reserve will most probably not announce an interest hike but, we still have the accompanying statement to look forward to. If the market finds the Fed’s tone hawkish or even at least optimistic enough, then we may just see the dollar snatch a pip or two from its safe-haven counterparts. So make sure you don’t miss that!

[PipDiddy]

Zzzzzzz… The dollar’s price action yesterday was as exciting as watching water boil when it only inched by a few pips against its major counterparts. A holiday in Japan closed USDJPY only 3 pips higher at 85.75, while EURUSD crawled by 9 pips at 1.3062.

Hmm, are the dollar bulls and bears gearing up for more action? Only the NAHB housing market index was released yesterday, and the data didn’t even move from its 18-month low of 13 due to the expiration of the tax credit.

The housing starts at 12:30 pm GMT might give us a clearer picture, but the data is also expected to remain at its 550,000 figure.

Another expected non-mover is the building permits report at 12:30pm GMT. The data also expected to retain its 560,000 number, and a bigger-than-expected number might put a smile on the building constructors’ faces.

Of course, even those red flags got nothing on the big FOMC decision today at 6:15 pm GMT! Aside from the Fed’s interest rate decision, market geeks are going to be all eyes and ears on the Fed’s plans for the economy. If the Fed expands their balance sheet enough to signal a QE round 2, then we might see the dollar bears party like there’s no tomorrow.

Watch your trades closely, kiddos!

[PipDiddy]

The dollar stopped, dropped, and rolled down the charts as the Fed’s pessimism set it on fire. It lost against all of its major counterparts, with EURUSD reaching its one-month high at 1.3286 and the euro burning 173 pips to end the day. AUDUSD also tapped its 2-year high at 0.9565 while USDJPY closed lower at 85.10.

In a nutshell, the FOMC minutes revealed that the central bank is still pretty concerned about the recovery of the US economy. There wasn’t really anything in the statement that came off as a surprise to traders. However, the Fed’s remark about inflationary pressure barely being present and its willingness to “support” the economy, might have hinted that QE2 is on the way. Yikes!

Not even yesterday’s roster of better-than-expected housing reports extinguished the dollar’s bear fire. According to Census Bureau, the number of building permits increased by 56,900 in August which was slightly better than the 56,000 consensus. Housing starts also came in as a pleasant surprise by printing at 59,800 for the month, overshooting both the 55,000 forecast and its 54,000 reading in July.

With no high-caliber report on tap for today, I wonder if investors will continue dumping their dollars like hot potatoes. We only have the house price index for July at 2:00 pm GMT later. Analysts are expecting to see a softer decline by 0.2% during the month after it fell by 0.3% in June. A better-than-expected figure may be bullish for the dollar as it would support yesterday’s data in implying that the housing market may already be revving up. I’m not sure though, if it will be enough to counter the Fed’s pessimism.

Oh! Make sure you also tune in to the result of Portugal’s bond auction as it may cause a shift in market sentiment. Good luck!