September 1, 2011
The dollar danced to the tune of risk aversion yesterday as it gained against high-yielding currencies, but lost against its fellow safe havens on mixed economic data. EUR/USD sharply dropped by 88 pips to 1.4366, while USD/CHF plunged to an intraday low of .7995 before capping the day with a 141-pip loss at .8057.
Just when investors thought that risk appetite was creeping in – BAM! They were presented with mixed economic reports from the U.S. The Challenger job cuts report revealed less layoff plans in August, while the ADP report printed at 91,000 when analysts already pegged the figure near 50,000. These employment figures are still weak, of course, but they weren’t as bad as markets had predicted.
Chicago’s PMI data also gave currency bulls a bad moment, but only for a while because the 56.5 reading in August is actually better than the 54.3 index number that analysts were eyeing. Lastly, factory orders in July went up by 2.4%, which is not only better than June’s upwardly revised 0.4% growth, but is also better than the 0.8% growth forecast.
Will the dollar gain more ground against its high yielding counterparts today? At 12:30 pm GMT we’ll get hold of the initial jobless claims report, which will be followed by the ISM manufacturing PMI at 2:00 pm GMT. Both reports will be considered my most investors ahead of the big NFP report this Friday, so make sure you watch out for it too!
Also remember that aside from the U.S. economic reports, markets will also be watching for any signs of more QE from the FOMC members. Word around the hood is that Fed President Lockhart has been stirring up the airwaves with his comments, so stick around for more development on this, aight?
Last edited by PipDiddy; 09-01-2011 at 09:30 PM.
"The only cable I watch is the pound baby."