Daily Economic Commentary: United States

[PipDiddy]

Are the dollar bears gearing up for another move? The dollar resumed its losing ways yesterday, as EUR/USD closed 18 pips higher at 1.3056, while AUD/USD ended the day at 1.0488, up 41 pips above its opening price.

Mixed housing data didn’t give the dollar much support, as we saw an improvement in existing home sales and building permits while housing starts dipped slightly.

The annualized pace of existing home sales rose to an impressive 4.82 million, which was way higher than the projected 4.57 million pace. This was also a near 8% increase from the previous month’s figure of 4.47 million. This could suggest that the market for old homes is improving, perhaps due to lower selling prices as owners try to unload their properties.

Meanwhile, we saw contrasting results in the building permits and housing starts figures, as the pace of permits rose to 800,000, while housing starts clocked in at just 750,000. It was anticipated that the two reports would print at 790,000 and 770,000 respectively.

For today, we’ve got another slew of data headed our way, starting with the weekly jobless claims report at 12:30 pm GMT. Claims are projected to come in at 374,000, which would mark a slight improvement from the 382,000 that was posted last week.

Later on at 2:00 pm GMT, the Philadelphia Fed Index will be released. My minions tell me that the index should print at -4.1, which would be slightly higher than the -7.1 score we saw last month. Should the report come in above the 0.0 mark, it may just spark risk appetite, which could lead to another round of losses for the Greenback.

Good luck trading today my fellow forex fanatics!

[PipDiddy]

Could that be risk aversion creeping back into the scene? After all, the dollar was generally stronger against most of its major counterparts, as EUR/USD, GBP/USD, and AUD/USD all closed lower on the day.

Part of the reason why we saw safe havens rally yesterday was due to poor Chinese data early in the Tokyo session. The Chinese HSBC manufacturing PMI printed at 47.8, marking the ELEVENTH straight time that the index has come in below the 50.0 mark. This indicates that Chinese managers are still pessimistic about the future of their respective industries, which just means a bigger risk to the growth of the Chinese economy.

In any case, this triggered an early round of risk aversion, helping the dollar’s cause.

Unfortunately, data during the New York session wasn’t any better.

First, weekly jobless claims disappointed like a Ben Affleck acting performance, as it printed at 382,000, much higher than the projected 374,000 figure.

Second, while the Philly Fed Index did clock in a better-than-expected score of -1.9, it still marked the 5^th straight month that the index printed below 0.0. Just like the Chinese HSBC PMI, this means that manufacturers in the Philadelphia area are still pessimistic about the outlook of economy.

We also got comments from Fed member Dennis Lockhart, who talked about the labor market at a conference yesterday. As expected, Lockhart reiterated the tone from the Fed’s last FOMC statement, which was that the central bank is mainly focused on the labor market and that current conditions were not up to par.

For today, we don’t have any hard data on tap, although take note that Lockhart will be speaking again about monetary policy and the outlook of the economy at another conference. Chances are that he’ll simply echo everything that was said at the FOMC statement, but who knows, he might slip and tip the Fed’s hand on other tactics it may have in mind!

[PipDiddy]

With only Fed member Dennis Lockhart taking center stage last Friday, it’s no surprise that the Greenback ended the week with mixed results against its counterparts. EUR/USD closed with a 17-pip gain at 1.2985 while USD/CHF recovered from an intraday low of .9285 to a .9329 closing price.

As we suspected, Lockhart mostly repeated his sentiments from Thursday, saying that the labor market remains weak in the U.S. and that the new round of Fed stimulus will help in boosting the economy. The lack of data made the dollar vulnerable to the volatility in markets that came after rumors of SNB selling EUR/AUD and Middle East firms buying EUR/USD made its way into the newswires.

Let’s see if we can get a clearer price action from the scrilla this week when a couple of major reports are released. Only a speech by Fed member John Williams is scheduled today, but tomorrow at 1:00 pm GMT we’ll see the S&P house price index report followed by the CB consumer confidence at 2:00 pm GMT. Treasury Secretary Tim Geithner will complete the day at 5:30 pm GMT when he gives his speech in New York.

Other major data scheduled this week include the new home sales on Wednesday at 2:00 pm GMT, the durable goods and initial jobless claims reports on Thursday at 12:30 pm GMT, the pending home sales number at 2:00 pm also on Thursday, and the Chicago PMI report on Friday at 1:45 pm GMT.

The reports above could give clues on how long the Fed will need to implement its open-ended QE3, so you better stick around to monitor the dollar’s price action!

[PipDiddy]

Put your hands up in the ayer for the dollar! Its performance in yesterday was pretty stellar, scoring wins against all of its counterparts save for the yen. EUR/USD closed the day 44 pips below its opening price at 1.2927 while AUD/USD ended the day at 1.0417 after opening at 1.0417.

There wasn't any economic report released from the U.S. Luckily for the dollar, risk aversion dominated market sentiment yesterday.

As I said in my EUR commentary, disappointing economic data from Germany hinted that the country could be headed for a recession. News that Greece might be facing a shortfall in its budget and Spain's refusal to ask for a bailout also weighed down on sentiment.

Traders seem to have there eyes on the three euro zone countries. So, make sure you're also on your toes for updates from them! More bad news could intensify risk aversion and send the dollar even higher.

Also, keep tabs on the reports that we have on tap from the U.S. today because they will probably affect the currency's price action.

At 1:00 pm GMT, the S&P house price index for July is anticipated to show that house prices increased by 1.3% during the month. Then at 2:00 pm GMT, Conference Board's consumer confidence report for September will be released. The consensus is for an increase of 63.1.

[PipDiddy]

Score another one for the Greenback! Thanks to stronger-than-expected U.S. data and risk aversion in markets, the dollar dominated its counterparts yesterday. EUR/USD fell 67 pips down from its intraday high, while USD/CHF closed 15 pips higher than its open price. Booyah!

The dollar was in the red zone for most of the London and early U.S. session as the euro zone officials projected solidarity through a couple of press conferences. The U.S. data even went with the risk appetite train as the S&P house prices printed a 1.2% uptick for July against June’s 0.6% growth.

The Richmond manufacturing index also clocked in a reading of 4 against its -9 figure in August, while the CB consumer confidence printed its second highest reading since February 2011. With positive figures like these, it’s no wonder the currency bulls were so giddy early in the day!

Unfortunately for the high-yielding currencies, news of violent protests in Spain rained on the risk on parade just before the markets closed. The protests eventually provided opportunity for the currency bears to drag the high-yielding currencies lower against the dollar.

Let’s see if the new home sales data scheduled at 2:00 pm GMT will provide a repeat of yesterday’s price action. The report is expected to come in at 381,000 in August after showing a 372,000 reading in July, but keep an eye out in case we see surprises!

[PipDiddy]

Thanks to the risk off market environment, the U.S. dollar was able to outpace most of its major counterparts in yesterday's trading. EUR/USD chalked up another losing day as it closed at 1.2684, more than 20 pips below its 1.2905 open price. Will the Greenback continue to benefit from risk aversion today?

U.S. new home sales were weaker than expected in August as the figure came in at 373K, which was less than the consensus at 381K. This just goes to show that the Fed's extended period of low interest rates might not be enough to spur a full-scale recovery in the U.S. housing market, and that they'd need to do more later on in order to ensure a housing rebound.

Today, the U.S. is set to release its durable goods orders data, along with the initial jobless claims report, at 1:30 pm GMT. Durable goods orders are expected to be down by 4.7% in August while the core version of the report could show a 0.2% uptick. Meanwhile, initial jobless claims are expected to improve from 382K the other week to 378K for the previous week.

By 3:00 pm GMT, the U.S. will release another housing market indicator in the form of its pending home sales data. For the month of August, pending home sales are expected to be down by 0.4% after chalking up a 2.4% increase in July. Bear in mind that another weaker than expected housing market indicator would reinforce the view that the U.S. is still far from reaching a strong recovery in housing, which could keep risk-taking in check for the rest of the day.

[PipDiddy]

What do you get when risk appetite is coupled with weak U.S. data? A weak U.S. dollar! The Greenback got clobbered by its counterparts yesterday as EUR/USD climbed by 48 pips to 1.2912 while Cable also enjoyed a 75-pip rally.

Trouble for the dollar bulls began late in the London session when Spain’s government officials delivered their austerity plans. The details of Spain’s plans are in my EUR commentary, but for now all you need to know is that investors ate up their plans like it was ice cream with a big fat cherry on top. This boosted risk appetite in markets, which weighed on the low-yielding dollar.

And then there are the weak U.S. economic reports. The headline figure for durable goods orders dropped by a whopping 13.2% in August, which is not only weaker than the 3.3% growth reading in July, but is also the steepest drop since 2009.

Of course, it didn’t help that the Q2 U.S. GDP was surprisingly revised lower, now showing only a 1.3% growth instead of its previous 1.7% reading. Even the pending home sales data disappointed expectations with a 2.6% decline in August when market players were only expecting a 0.4% slip. Meanwhile, traders ignored the initial jobless claims report, which clocked in at 359,000, the report’s best number since mid-July.

Today the U.S. is scheduled to release its core PCE index at 12:30 pm GMT, followed by the Chicago PMI data at 1:45 pm GMT and the revised UoM consumer sentiment report at 1:55 pm GMT. The reports are expected to show a bit more strength than their previous readings, but as the GDP revision has shown us, surprises could just be around the corners!

[PipDiddy]

The Greenback ended the third quarter of the year with a bang as it closed higher against its major counterparts last Friday. EUR/USD ended the day at 1.2851 while USD/JPY closed 3 pips above the 78.00 handle. What's in store for the U.S. dollar today?

Only medium-tier reports were released from the U.S. last Friday and these came in mostly worse than expected. Personal income posted a mere 0.1% uptick while personal spending rose by only 0.5% in August. Meanwhile, Chicago PMI also missed the mark as it dipped below the 50.0 handle and came in at 49.7, indicating a contraction in their manufacturing industry. Lastly, the consumer sentiment index measured by the University of Michigan came in at 78.3, short of the consensus at 79.0 and lower than the previous reading at 79.2.

There are a couple of red flags on the U.S. economic schedule for today and these are the ISM manufacturing PMI and Fed head Bernanke's speech.

The manufacturing index, which is set for release at 3:00 pm GMT, could show that the contraction slowed down in September as the reading could rise from 49.6 to 49.8. However, a better than expected figure or a reading above 50.0 would reflect a strong improvement in the U.S. manufacturing industry, which could be positive for risk and negative for the Greenback.

Later on, Ben Bernanke is set to give a speech entitled "Five Question about the Federal Reserve and Monetary Policy" which might shed more light on the central bank's recent decision to implement QE3 and their next monetary policy plans. Keep your eyes and ears peeled for his testimony around 5:30 pm GMT.

[PipDiddy]

No strong start to Q4 for the dollar. Its performance was anything but stellar as it failed to make headway against most of its major counterparts, despite the release of better-than-expected data. Will today be any different?

The ISM manufacturing PMI shocked a lot of investors as it printed a reading of 51.5, which is far better than the median forecast of 49.8. Thanks to a strong increase in orders, the manufacturing industry was able to break its 3-month streak of contraction. This came as a big surprise mainly because individual regional reports that had been released earlier weren't very upbeat, so the markets weren't expecting much from the national version of the report.

After that, the spotlight shifted to Fed Chairman Ben Bernanke, who tried his best to defend the Fed's QE3 program. He spoke up to appease the program's haters by saying that the move was necessary to boost the economy and promote jobs growth. He also said that he and his boys plan to keep stimulus measures in place even after the economy shows signs of recovery.

If that doesn't show his commitment to easy monetary policy, I don't know what will! Hmm... Kind of makes you wonder if the Fed has any more tricks up its sleeve, eh?

Nothing on the calendar for today. In the meantime, I suggest y'all track risk sentiment to see if the markets will be dollar bullish or bearish today. Good luck, homies!

[PipDiddy]

The Greenback’s performance was as mixed as a bag of jellybeans yesterday as traders focused on risk appetite in the markets. USD/CHF dropped for a second day in a row, but USD/JPY also rose by 10 pips. What the heck was influencing risk sentiment anyway?

With no major data out from the U.S. yesterday, economic themes like the Spanish bailout story dominated currency price action. See, Spanish officials are denying the possibility of a bailout in the near future while investors are all but pricing it in. Meanwhile, the RBA provided some action in the late Asian session as it surprisingly cut its rates. But more on that in my AUD piece.

Today is a good day for news traders who like U.S. economic reports. At 12:15 pm GMT we’ll get our first glimpse on the state of the U.S. jobs market when the ADP report is released. The ISM non-manufacturing PMI, another closely watched jobs report, will follow at 2:00 pm GMT. Both reports are expected to come in a bit weaker than their figures last month, but make sure your trading plans have provisions for surprises!