Daily Economic Commentary: United States

[PipDiddy]

Ahhh, can you taste that dollar bulls? It’s the sweet taste of victory! Thanks to a slightly disappointing German bund auction and some negative comments from financial officials, the safe haven Greenback was able to rally yesterday. The U.S. dollar index, which gauges the overall strength of the currency, extended its gains to 82.85 from 82.77.

According to news reports, Germany was expecting to sell around 4 billion EUR worth of 10-year bunds but was only found demand for 3.4 billion EUR. In addition, yields also rose to 1.42% from 1.31%. Meanwhile, the German party CDU indicated that it was against the backing of more financial aid to Greece.

Today, no major news reports are lined up as only the U.S. trade balance and the usual weekly unemployment claims report are due. The trade balance is predicted to come in with a 47.4 billion USD deficit while the weekly unemployment claims is slated to show that 371,000 people claimed for jobless insurance. The actual figures will be released at 12:30 pm GMT today.

[PipDiddy]

The Greenback showed some muscle again yesterday after economic data from the country showed an improvement in both the trade deficit and the jobless claims. The currency found itself higher versus other major currencies such as the euro, the pound, and the franc.

According to the trade balance, the U.S. deficit has fallen to 42.9 billion USD from 47.4 billion USD. Meanwhile, the initial jobless claims report has showed that the number of peopel that availed of unemployment insurance ticked lower to 361,000 from 371,000 the week before.

No major news report scheduled to be published from the U.S. today but many analysts are saying that the Greenback has probably bottomed out against the euro and is going to head higher. If bad news from the euro zone comes out, this may very well be the case.

[PipDiddy]

Surprise, surprise! Guess who was at the bottom of the dog pile last Friday? That's right, the mighty dollar! It weakened against almost all of its major counterparts. Can it stage a comeback this week?

Surprisingly enough, the dollar couldn't help but slide down the charts even after China released trade balance data that was much worse than expected. Though this reignited fears of a global economic slowdown, it didn't really do enough to spark a full-on bout of risk aversion.

As a consolation, the dollar was able to hold its ground against the euro (one of last Friday's weakest currencies), which was still taking a beating from the markets' waning hope for support from the ECB.

As for staging a comeback this week, it looks like the dollar is already has already begun to make its move as it's off to a strong start against its counterparts. But will its rally last?

The answer to that question might depend on the results of the reports the U.S. is due to release this week. We won't have anything on tap today, but the economic calendar is packed for the rest of the week!

Tomorrow, we'll kick off with retail sales data (seen at 0.4% up from -0.5%) and the PPI (expected at 0.3% up from 0.1%). Then on Wednesday, we'll take a look at the CPI, which is supposed to show a 0.2% increase in prices, up from 0.0% the previous month.

Thursday then picks up with building permits (forecasted at .77 million from .76 million) and the Philly Fed manufacturing index (to improve to -4.3 from -12.9). And to cap off our week on Friday, we have the prelim University of Michigan consumer sentiment index (predicted to improve to 72.5 from 72.3).

Phew! With such an action-packed week ahead of us, y'all better be prepared for a crazy week of trading! Make it a habit to read my Daily Forex Fundamentals and Big Pippin's Daily Chart Art to keep yourself updated with the latest developments!

[PipDiddy]

With no major data out from the U.S., the Greenback’s price action was as mixed as the performers in the closing ceremony of the Olympics. USD/CHF ended up with a 36-pip fall, but USD/JPY clocked in an 8-pip rise. What gives?

Well, it seems that traders were waiting by the sidelines until the U.S. releases its major news reports like the retail sales data coming up at 12:30 pm GMT today. Word on the streets is that investors are expecting a higher figure this time around thanks to higher consumer and oil prices.

The PPI report is also scheduled at 12:30 pm GMT today, but like the retail sales data, it isn’t really expected to make an impact on the Fed’s decision to pull the QE3 trigger. The central bank has its eyes on the employment numbers, you see. So unless these reports badly miss its growth forecasts, we might not see much movement on the Greenback pairs.

If you want to try your hand at news trading though, you can also practice your skills on business inventories and IBD/TIPP economic optimism report at 2:00 am GMT. Both reports are expected to print a bit higher than their previous figures, but keep an eye out for any surprises!

[PipDiddy]

Well, well, well... Look who decided to respond to fundies! Following the release of upbeat retail sales data, the dollar shimmied up the charts to record solid wins against its major counterparts. EUR/USD slid from its high of 1.2387 to end the day 12 pips lower at 1.2325. Meanwhile, USD/JPY rose 38 pips to finish at 78.73.

July's retail sales report printed a huge upside surprise yesterday, showing a 0.8% increase in headline spending, which is almost triple the figure that many had predicted. Likewise, the core figure showed a 0.8% surge in sales, undoing the previous month's 0.8% decline and surpassing forecasts which called for a 0.4% rise.

These numbers, in turn, led to a spike in the demand for the dollar. If you think about it, homies, it's actually been a while since we last saw the dollar respond to fundamentals. Why now?

Well, one reason could be because the Fed hinted at its last FOMC statement that its future policy moves will depend highly on employment data and developments in the euro zone. And guess what? The latest NFP report came in much better than expected and we haven't heard any new (major) bad news from Europe! So as of now, it seems that QE3 isn't really needed... yet!

Today, we have another red flag on the calendar in the form of the U.S. CPI. It's expected to show a 0.2% rise in prices, up from 0.0% the previous month. The core CPI report, meanwhile, is anticipated to print another 0.2% increase in prices. Also, the Empire State Manufacturing index is slated to tick down from 7.4 to 6.6. These reports will all be available at 12:30 pm GMT.

After that, TIC long-term purchases data will be released. Look for the report to show a decrease from 55.0 billion UDS to 41.5 billion USD in June.

[PipDiddy]

Topsy-turvy day for the scrilla, as it was simply all over the place. The dollar lost to the Canadian dollar for the 8^th time in the past 9 days, but managed to edge slightly higher versus the euro and yen.

The results of the Empire State Manufacturing Index may have put a damper on all the optimism created from the previous day’s retail sales report. The index came in much worse than expected, printing at -5.9, after it was projected to show a reading of 6.6. This indicates worsening economic conditions in the New York state area.

The TIC long-term purchases figures were also much lower than originally predicted, as purchases fell from 55.9 billion USD in to just 9.3 billion USD this past June. This means that less foreigners are purchasing dollar-denominated financial assets. Could it be that investors are diversifying away from the dollar?

Lastly, a report showed that inflation remains on the down low, as the headline and core CPIs came in at 0.0% and 0.1% respectively. Expectations were that both would print at 0.2%. With inflation subdued, this gives the Fed more room to dump more dollars into the economy if it ever decides to go ahead with QE3.
For today, we’ve got another round of red-flags headed our way starting at 12:30 pm GMT.

The annualized rate of building permits is projected to have risen slightly from 760,000 to 770,000 this past July. Meanwhile, the annualized pace of housing starts is expected to remain steady at 760,000. Take note that recent data have indicated signs of life for the housing market, so be on the lookout for any positive surprises.

Later on at 2:00 pm GMT, the Philly Fed Manufacturing Index is due. Word on the street is that while the Philadelphia manufacturing sector still experienced worsening conditions last month, it has improved slightly, as reflected by the increase in the index from -12.9 to -4.7. Given how the Empire State version came in much lower than projected, another poor figure in today’s report may trigger risk aversion in the markets.

[PipDiddy]

Tough day in the office for the Greenback yesterday! The U.S. dollar lost ground to most of its major counterparts except for the Japanese yen as mixed U.S. data dampened demand for the safe-haven currency. Will it have a chance to make up for its losses today?

U.S. building permits came in stronger than expected for July as the figure climbed from 0.76M to 0.81M during the month. Housing starts, on the other hand, were just in line with expectations of a 0.75M reading. Last but certainly not least were the weekly jobless claims which missed the consensus and posted a 366K increase in first-time claimants for the previous week.

Today, the U.S. is set to print its preliminary consumer sentiment figure from the University of Michigan. The reading is expected to climb from 72.3 to 72.5 for this month, reflecting a slight improvement in consumer confidence. If the actual figure comes in higher than expected, we could see the U.S. dollar recover from yesterday's selloff. Otherwise, weaker than expected results could mean more losses for the Greenback. Make sure you keep an eye out for this release at 1:55 pm GMT!

[PipDiddy]

Thanks to the mildly positive consumer sentiment survey, the dollar capped off the week on a good note. The dollar index rose to 83.03 from 82.88 as it posted gains versus other major currencies like the pound, the euro, and the commodity-based currencies.

The University of Michigan consumer sentiment survey showed that confidence unexpectedly rose in August. The survey printed a reading of 73.6 from 72.3 the prior month. It suggests that we could see household consumption increase for this quarter.

This week, we’ve got a couple of red flags on the U.S. economic calendar.

On Wednesday, we’ll see the existing home sales report. It comes out at 2:00 pm GMT and it is expected to show 4.52 million in sales. The FOMC meeting minutes will also be released. It’ll publish at 6:00 pm GMT.

Then on Thursday, there’s new home sales report and the weekly initial jobless claims. They are slated to show 362,000 and 365,000, respectively. And finally, on Friday, the durable goods orders report is due. It’s projected to show a 0.5% gain.

[PipDiddy]

With no hard data released yesterday, dollar pairs were pretty much unchanged yesterday. USD/CHF and EUR/USD closed near their opening prices, while the comdolls edged just slightly higher. Will we see more action in today’s matchups?

Based on our economic calendar… probably not, as we’ve got no hard data lined up from Uncle Sam today. Just be informed that FOMC member Dennis Lockhart will be speaking at an economic forum and will discuss his outlook on the U.S. economy. If he expresses a dovish tone, it could mean that he's leaning towards the QE3 camp and this could trigger some volatility in the markets. Watch out!

[PipDiddy]

You wanted action? Well, you certainly got it! The dollar was abandoned aggressively yesterday as optimism in the euro zone sparked a strong bout of risk taking. As a result, EUR/USD found itself 115 pips higher at the end of the day, while USD/JPY ended 16 pips lower.

The main reason behind the dollar's weakness was speculation that the ECB will soon cook up a plan to temper the region's high bond yields. Some say the central bank may set a cap on these yields, while others think it could load up its bond purchases. In any case, these rumors were enough to get traders to ditch the dollar in favor of the euro and even the yen.

On the domestic front, the only bit of news we got was from Fed member Lockhart, who practically killed hopes of more stimulus. He pointed out the recent "firm" economic reports that the U.S. has been rolling out while saying that he sees potential for "more appetite for risk." But more importantly, he added that deflation ain't a concern at the moment! Looks like the Fed is stepping further and further away from QE3!

Today, existing home sales data will be available, and forecasts say that we'll see an improvement from 4.37 million to 4.52 million. If you're interested in trading this release, catch it at 2:00 pm GMT.

After that, we'll take a look at the latest FOMC meeting minutes, which could give us valuable insight as to what the Fed plans to do next. Are other policymakers as hawkish as Lockhart? Find out at 6:00 pm GMT?