Daily Economic Commentary: United States

[PipDiddy]

Just like the first day of a new semester, the dollar went in different directions yesterday as traders came back from the Hurricane Sandy holidays. While USD/JPY jumped by 22 pips, GBP/USD also rocketed by 61 pips. What went on in the U.S. anyway?

Well, the worse-than-expected Chicago PMI report probably didn’t help the dollar. The report printed a reading of 49.9 in October, lower than the 51.0 expansionary reading that analysts were expecting. Even the quarterly employment cost index disappointed expectations with only a 0.4% growth.

Lets see if the currency bulls will show the Greenback some lovin’ today when a parade of economic reports is scheduled for release.

At 11:30 am GMT, the Challenger job cuts report is printed. Then, at 12:15 pm GMT we’ll see the ADP non-farm employment report, followed closely by the initial jobless claims at 12:30 pm GMT. Last but not the least, we’ll get hold of the CB consumer confidence data as well as the ISM manufacturing PMI at 2:00 pm GMT.

Are you planning on trading any of these reports? I sure hope so! They’re all potential market movers!

[PipDiddy]

With more and more New York traders crawling back into the workplace and thanks to good economic data, the Greenback was able to pare some of its losses from earlier this week. EUR/USD fell 21 pips to finish at 1.2941 while GBP/USD closed 14 pips lower to close at 1.6124.

ADP payrolls and weekly jobless claims surprised to the upside yesterday, which may have helped the dollar recuperate. According to the ADP report, an additional 158,000 jobs were added last month, following the 162,000 increase we saw last month. It was expected that just 138,000 more jobs would be added in September. Meanwhile, jobless claims dropped slightly to 363,000, down from the 371,000 forecast.

In other news, the CB consumer confidence index printed at 72.2, showing a nice improvement from the previous reading of 68.4, while the ISM manufacturing PMI improved slightly from 51.5 to 51.7.

Overall, it was a pretty good in terms of economic data and it’s no surprise that the dollar got some relief in the markets.

But now’s not the time to relax, as we’ve got the granddaddy of all economic reports headed our way. Y’all know what I’m talking about! That’s right, it’s NFP Friday, baby!

Word on the street is that the labor market added 123,000 jobs over the past month, which would be a nice follow up to the October NFP increase of 114,000. Meanwhile, the unemployment rate is projected to jump slightly from 7.8% to 7.9%.

Keep in mind that while the ADP report did come in better than expected, it hasn’t exactly been a good predictor of what to expect for the NFP report. That said, you’d best be served by being ready for ANYTHING to happen. Know that the U.S. markets are still in disarray following the aftermath of hurricane Sandy, so we could see some pretty wild moves today.

If you plan to trade the NFP report, make sure you have a plan in place! If you’re worried about the potential volatility in the markets, there’s no shame in sitting out and watching from the sidelines!

[PipDiddy]

The dollar was a blockbuster hit on the charts last Friday like the new Bond Movie, Skyfall. It scored wins across the board, gaining 109 pips from the euro, 63 pips from the Aussie, and 27 pips from the yen.

For the most part, the stellar NFP report for October spurred the demand for the dollar. Data from Labor Statistics show that there were 171,000 jobs added during the month which topped the consensus for a net addition of 123,000 people in the workforce. Of course, the upward revision in September's reading from 142,000 to 148,000 only made traders even more excited to buy the Greenback!

I’m sure Forex Gump will soon have the inside scoop on the labor data. Make sure you stay tuned for it.

As for today, we only have the ISM-non manufacturing PMI report for October on tap for the dollar. It is eyed to come in at 54.6 later at 3:00 pm GMT. However, I have a feeling that if it comes in better than expected, we could see the dollar rally. Don’t miss it, ayt?

[PipDiddy]

Fear is in the air, baby! With U.S. voters getting set to hit the polls, the markets have been edgy and this has been beneficial to the safe haven dollar. As a result, the American currency found itself extending its gains against the euro, with EUR/USD dropping another 29 pips to land at 1.2789.

Ironically enough, the uncertainty surrounding the U.S. has worked in favor of the dollar, as traders have been cautious ahead of today's presidential election. After all, there's quite a bit on the line here, as Obama and Romney have differing stances on major economic issues.

Obama's looking to raise taxes on certain companies and high income playahs, while Romney wants to implement broad-based tax cuts. With regard to China, Romney seems to want to take on the issue of the yuan's artificially low value more aggressively, threatening to label China a currency manipulator. On the other hand, Obama has been taking a more subdued approach.

Even Fed Chairman Ben Bernanke's job is at stake! Obama would probably keep ole' Ben, but Romney wants our homeboy out!

Phew! Taken as a whole, it seems that the economists view an Obama victory as something that could trigger a dollar sell-off. In any case, y'all better get ready for some crazy action, folks! It only happens once every 4 years, so we could be in for a rare treat on the charts.

[PipDiddy]

The dollar's price action in yesterday's trading was as mixed as a piña colada. It gave up ground to its higher-yielding counterparts, with EUR/USD closing 22 pips higher at 1.2816 and GBP/USD finishing with a 22-pip gain at 1.5994. On the other hand, USD/JPY ended the day at 80.41 after opening at 80.27.

There wasn't any market-moving report released from the U.S. Consequently, this left market participants at the edge of their seats, waiting for the outcome of the elections.

Recent price action in the forex market is pretty similar to what we saw in 2008. With that said, don't be surprised to see a sell-off in USD/JPY and equities after the election results are announced. As I said yesterday, the re-election of President Obama could have a temporary bearish effect on the dollar because of his policies and his plan of keeping the ever-so-dovish Ben Bernanke as Fed Chairman.

Our forex calendar is still blank for reports from the U.S. today. So make sure you keep tabs on the elections, ayt?

[PipDiddy]

It was a wild, wild Wednesday for the Greenback. The U.S. dollar index that tracks the performance of the currency versus other major currencies ended the day at 81.24, up from its opening level at 81.08.

Initially, the Greenback found itself on the back foot due to Obama’s win in the U.S. presidential election. Investors saw Obama’s victory as continuation of the ultra-accommodative monetary policy of the Fed.

As the day went on, however, risk aversion set in which enabled the Greenback to reverse its losses. Apparently, the European Commission’s latest forecast showed that the recession will deepen in 2012 and recovery will be very weak in 2013. Greece’s austerity vote also weighed in heavily on market sentiment.

Today, the U.S. economic calendar has two important reports due. The first one is the trade balance. It’s going to come out at 1:30 pm GMT and is projected to show a 44.9 billion USD deficit.

The second one is weekly initial jobless claims. It’s going to be released at the same time as the trade balance and it is expected to report that 367,000 people claimed for unemployment insurance in the past week.

[PipDiddy]

The dollar bulls partied in the streets yesterday as risk aversion continued to grip the markets. USD/JPY missed the memo though, and dropped 51 pips from its open price. So what exactly pushed the Greenback higher?

Blame it on risk aversion! Thanks to ECB’s Draghi making grim statements about Greece and Spain and the BOE doing nothing to increase its stimulus, investors found it easy to flock to the lower-yielding currencies. But more on that on my EUR and GBP updates.

It also didn’t hurt the dollar that the U.S. coughed up better-than-expected economic reports. Initial jobless claims fell to 355,000 last week after clocking in at 363,000 in the previous week. Even the trade balance data supported the Greenback a bit with only a 41.5 billion USD deficit against the expected 44.9 billion number.

Only the preliminary UoM consumer sentiment data at 3:55 pm GMT is scheduled for release today, so you might want to pay attention to the euro area for direction of risk sentiment.

Good luck and good trading, kids!

[PipDiddy]

Thanks to a wide-reaching case of risk aversion, the dollar was able to reign supreme last Friday. It pummeled other major currencies, especially the European currencies like the euro and the pound. The U.S. dollar index, which began the day at 81.26, ended the week at 81.49.

The pullback in risk was the result of the market’s focus shifting to the U.S. fiscal cliff. The U.S. fiscal cliff refers to the effect of a number of laws that could result in tax increases and spending cuts. While the laws aren’t necessarily bad, it could push the U.S. into a recession.

In other news, economic data released last Friday was positive. The University of Michigan Consumer Sentiment Survey smashed expectations and printed an 84.9 reading. The forecast was for it to remain at 82.6. The report on Import Prices was also higher than consensus. It came in with a 0.5% gain versus the 0.0% the market had initially anticipated.

This week, we’ve got a couple of market-moving events scheduled to happen. The reports start coming out on Wednesday, when the U.S. retail sales and producer price index publish. Retail sales are expected to have remained flat for the month of October while the producer prices are expected to have risen by 0.2%. Both reports are going to be released at 1:30 pm GMT.

The minutes of the most recent FOMC meeting will also be released on the same day. It’s an important report to watch because it provides a valuable insight into the economic and financial conditions that drive the Fed’s monetary policy.

On Thursday, we’ll see the U.S.’s Consumer Price Index and the Philadelphia Fed Manufacturing Index. The CPI is projected to show a 0.1% increase in October while the Philadelphia Fed Manufacturing Index is expected to show a reading of 2.3.

[PipDiddy]

The dollar’s price action was as mixed as a bag of jelly beans yesterday as the lack of U.S. data pushed traders to trade on risk sentiment. EUR/USD inched 8 pips higher while USD/CHF slipped by 13 pips.

Since the U.S. was celebrating Veteran’s Day yesterday, investors found it easy to trade on risk sentiment. And boy did they have a lot to consider!

Aside from the usual concerns about Spain getting a bailout or Greece defaulting on its debts, traders also paid attention to China’s trade numbers, Japan’s GDP figures, and the looming U.S. fiscal cliff.

If you can’t wait to trade U.S. reports today, then you should check out the IBD/TIPP economic optimism numbers out at 4:00 pm GMT, followed by the Federal budget balance figures at 8:00 pm GMT.

[PipDiddy]

Up, up, and aw...Ka-blam! The dollar was trading higher against its counterparts early on in yesterday's trading when its rally all of a sudden lost steam. It then finished the day with a mixed scorecard, incurring losses against the comdolls and the yen but gaining against its European counterparts.

Without any major economic data on tap, traders focus their attention on the U.S. fiscal cliff and Greece's bailout talks.

Perhaps we'll see the dollar trade in a clearer direction in today's trading with a handful of top-tier events scheduled from the U.S.

We kick things off at 1:30 pm GMT with the PPI and retail sales reports for October. The headline PPI figure is anticipated at 0.2% while the core reading is seen at 0.1%.

Meanwhile, the retail sales report is eyed to come in at -0.2% but excluding volatile items, consumer spending is estimated at 0.2%. Some analysts are saying that we could see an upside surprise though. They think that the stellar NFP report for October will also be reflected in the retail sales report.

Then at 7:00 pm GMT, the minutes of the most recent FOMC meeting will be released. Just like the last rate statement, the minutes could prove to be a non-event for the market. However, should the minutes show a deeper discussion about the improvements in the economy, the dollar could get sold-off on risk appetite.

Don't miss it, ayt?