Daily Economic Commentary: United States

Trading Discussion News and Economy
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All right Greenback, show 'em how it’s done! The safe-haven U.S. dollar dominated in last week’s trading as it ended higher against most of its major counterparts. EUR/USD fell from a week open price of 1.3788 to close at 1.3516 while USD/JPY ended 30 pips below its 77.20 weekly open. With plenty of U.S. economic releases scheduled this week, where could the Greenback be headed?

Thanks to the never-ending euro zone debt problems and the growing threat of a contagion, the U.S. dollar was able to benefit from the strong safe-haven rallies last week. There were hardly any top-tier reports on the U.S. economic schedule then, as Uncle Sam geared up for a bunch of releases for this week.

The existing home sales data is on tap for today and the report is expected to show that home sales dipped from 4.91 million in September to 4.82 million in October. Make sure you stay tuned for the actual release at 3:00 pm GMT because a stronger than expected figure could spur risk appetite and force the Greenback to return some of its recent gains.

The price action could heat up on Tuesday as the U.S. reveals its preliminary GDP figure at 1:30 pm GMT. This could show that the economy grew by 2.5% during the third quarter of the year, and any revisions could have a huge impact on risk sentiment. Of course the excitement doesn’t end there as the FOMC is set to release the minutes of its latest policy meeting at 7:00 pm GMT. You don’t want to miss out on this one because the minutes could contain clues on the Fed’s next monetary policy decisions.

On Wednesday, the durable goods orders data are on tap and the October figures could come in weaker than the previous month’s. Aside from that, the weekly jobless claims are also on tap at 1:30 pm GMT.

Wait just a minute. Isn’t the weekly jobless claims release usually scheduled on a Thursday?

Excellent observation! This week is a special one though because the U.S. will celebrate Thanksgiving on November 24 and spend the rest of the week recovering from their Thanksgiving feast. Besides, most traders will probably be off shopping for Black Friday deals on the last day of the week. I’m pretty sure Happy Pip has been waiting for those bargains all year long!

With that, expect lower liquidity in the markets for the latter half of the week. In other words, brace yourselves for higher volatility, folks! Stay on your toes at all times!

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The Greenback turned out to be the best performing currency yesterday, thanks to good ol’ risk aversion. Global growth concerns and rising bond yields in some troubled euro zone nations were the primary reasons behind the sour sentiment. The U.S. dollar index closed the day at 78.70, up 20 percentage points from its opening level.

Data from the U.S. was slightly better than expected. The existing home sales report came in at 4.97 million, higher than the 4.82 million initially predicted and the previous month’s 4.90 million.

Whether the Greenback can continue its rally today will depend greatly on the results of the U.S. GDP report at 1:30 pm GMT later today. The market is expecting a 2.4% growth, a notch lower from the previous quarter’s 2.5%. If the actual result turns out to be lower than forecast, the Greenback could actually end up rallying again on account of risk aversion.

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Ho humm… Most of the dollar pairs paced back and forth inside their respective ranges for almost an entire day as they awaited the release of the FOMC meeting minutes. Now that the minutes are out, will the dollar pairs stick to their ranges or are we in for some breakouts?

The minutes of the latest FOMC meeting revealed that some policymakers were open to further easing in order to stimulate the U.S. economy. Other FOMC members suggested that their interest rates should be based on a significant economic figure, such as CPI or the unemployment rate. Still, some pointed out that the central bank should specify how long interest rates will stay at their current levels. I guess “extended period” isn’t gonna cut it anymore, huh?

Dollar pairs barely budged after the release of the minutes though, implying that most market participants were expecting the FOMC members to be open for more easing. Perhaps the preliminary GDP figure, which was released a few hours prior to the FOMC meeting minutes, hinted that policymakers wouldn’t be so optimistic. After all, the GDP figure for the third quarter was revised from 2.5% to 2.0%, showing that growth wasn’t as strong as initially estimated.

As though the U.S. wasn’t dealing with enough problems already, speculations of a possible debt rating downgrade started floating around since the U.S. Super Committee was unable to reach an agreement regarding the government’s spending cuts. One possible scenario is that credit rating S&P would put the U.S. on downgrade watch for the next few weeks unless the U.S. lawmakers come up with a solid deficit reduction plan.

As for economic reports, the U.S. is set to release its durable goods orders data as well as its weekly jobless claims today. The headline durable goods orders figure is expected to come in at -1.1% while the core version could print a 0.1% uptick. Considering these expectations are already way below the previous month’s figures, worse than expected results could spur risk aversion and boost the safe-haven U.S. dollar. Meanwhile, initial jobless claims are expected to land at at 389K, just a little higher than the 388K reading for the other week. Keep an eye out for those reports due 1:30 pm GMT.

A few hours later, the U.S. is also set to report data on personal spending and income. While these reports aren’t expected to have a huge impact on price action, they could be indicative of future economic activity so y’all better watch out for those just the same. The revised University of Michigan consumer sentiment index is also due today and the report could show an upward revision from 64.2 to 64.6, reflecting more optimism among consumers.

Bear in mind that today is the last trading day for U.S. traders this week as they set off on an early weekend for their Thanksgiving holidays. With that, stay on your toes for potential profit-taking scenarios and higher volatility!

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Dollar bulls certainly have plenty to be thankful for this Thanksgiving as the dollar racked up wins across the boards yesterday! With risk aversion fueling demand for the safe haven, the dollar had an easy time gaining ground against its major counterparts. EUR/USD finally broke out of its range, falling 176 pips to close at 1.3337, while USD/JPY climbed above 77.00 to finish the day at 77.35. What can we expect to see now that U.S. bankers are out celebrating Thanksgiving?

Well, considering how strongly the dollar ended last night, we’ll probably see more of the same! As for yesterday’s reports, they were pretty much as mixed as a bag of nuts.

First, durable goods orders gave the markets a nice upside surprise as both the headline and core figures exceeded expectations. Core durable goods rose 0.7% last month, beating forecasts which called for a 0.1% uptick. Meanwhile, the headline figure showed a 0.7% decline, which, when compared to the 1.1% slide that economists had forecasted, isn’t so bad!

Also, the core PCE price index, which, if you’ll recall, is the Fed’s price index of choice, printed as expected and showed a 0.1% rise in prices.

Now onto the bad news! On a not-so-positive note, unemployment claims missed its mark as it showed a total of 393,000 claims instead of just 389,000. Personal spending also failed to meet expectations, showing a 0.1% monthly increase rather than 0.4% as many had anticipated. And last but not least, the University of Michigan consumer sentiment index was revised downwards from 64.6 to 64.1.

No reports due today because, as I had mentioned earlier, our American bros will be out and about celebrating Thanksgiving. That means y’all should be extra careful today, homies! Expect to see low liquidity and irregular volatility in the markets!

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While the American traders were busy filling up their tables with Thanksgiving side dishes, the dollar bears were also cooking up their own feast. Except for the pound, the dollar slipped against its major counterparts yesterday. USD/JPY fell by 26 pips to 77.09, while EUR/USD capped the day 12 pips higher at 1.3349 after tipping an intraday high of 1.3413.

The U.S. markets were closed to celebrate the Thanksgiving holiday yesterday, so the rest of the world traded on news from the other major economies (yep, I’m talking about the euro zone). Though bearish reports were released from the euro region, a short covering of short positions enabled the high-yielding currencies to pare back some of their losses against the Greenback.

The U.S. economic calendar is almost empty again today with only the Treasury currency report scheduled for release. But it doesn’t mean that you should start your weekend early! I heard that Italy is about to hold another bond auctions today, and that some of the European officials are also set to make some speeches. Be sure to watch those news reports to see how it might affect risk sentiment!

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Same story, different day! With risk aversion back in full swing, the dollar found itself on the winning side of the equation again. EUR/USD continued to fall, dipping another 116 pips to 1.3233, just as USD/JPY rallied 65 pips to 77.75.

Even with U.S. bankers out celebrating Thanksgiving, the dollar was able to finish last week on a high note as downgrades in the euro zone reignited old flames of risk aversion. Naturally, this sent traders scurrying back into the arms of the safe haven dollar.

This week, we have a whole mess of reports to look forward to.

The U.S. will begin publishing data today at 3:00 pm GMT, starting with new home sales data. The report, which records the monthly change in number of homes sold, is expected to slip down from 313,000 to 310,000.

Tomorrow picks up with the consumer confidence index, which is anticipated to improve from 39.8 to 44.4.

Then on Wednesday, we’ll take a sneak peek at U.S. employment data as the ADP employment survey is slated to show an increase of 130,000 jobs, up from 110,000 in the previous month. A few minutes after that, pending home sales figures will be ready. Look for pending home sales to rebound from the previous month’s 4.6% decline to post a 1.2% uptick.

On Thursday, we’ll have ISM manufacturing data on tap, and things are looking bright, at least according the forecasts. Survey says the manufacturing industry continued to expand, and will probably cause the index to rise from 50.8 to 51.5.

To wrap up our solid week, we’ll deal with the NFP report on Friday. Forecasts say that a total of 120,000 jobs were likely added last month, a considerable improvement from October’s rise of 80,000. Although this is expected to have no impact on the unemployment rate, which most predict to stay at 9.0%.

Phew! Just looking at that list of reports has already got me exhausted. With so many heavy-hitters due this week, you can bet we’ll get a lot of action on the charts over the coming days. Stay flexible, folks!

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It looks like the dollar was included in the holiday weekend deals, as it struggled in yesterday’s trading sessions. EUR/USD gapped up over the weekend and retested the 1.3400 handle before giving back its gains, while USD/CAD sank 93 pips to finish at 1.0353.

Risk appetite took off on optimism surrounding record Black Friday sales, as well as on rumors that the IMF was about to lend Italy 600 billion EUR. However, these rumors turned out to be false. Coupling this with the news that new home sales figures came in slightly worse-than-expected (307,000 versus 313,000), it’s no surprise that we saw risk appetite die off a bit late in the day, allowing the dollar to recoup some of its losses.

For today, the only red flag coming up is the CB consumer confidence report, due at 3:00 pm GMT. Word through the grapevine is that confidence has picked up a bit recently, and that the index will come in a 44.4. If the report prints much higher than this, it could spark another run of risk-taking midway through the New York session.

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Risk taking is still on, baby! Because of that, the Greenback chalked up another losing day as safe-haven flows eased and traders mustered enough courage to buy higher-yielding currencies. EUR/USD ended the day nearly 20 pips up from its 1.3310 open price while USD/JPY closed 14 pips below the 78.00 handle. Is it time for a midweek reversal though?

Good news from the euro zone allowed risk appetite extend its stay in the markets yesterday as EU officials showed increased willingness to help the cash-strapped nations in the region. Word through the forex grapevine is that the EFSF could get another expansion while the ECB is being asked to step in and loan funds to Spain and Italy. My euro zone economic commentary has the inside scoop!

As for economic data, the U.S. was able to print a couple of better than expected reports yesterday. The CB consumer confidence index jumped back above 50.0 and landed at 56.0, outpacing expectations of a climb from 40.9 to 43.9. This shows that financial confidence improved significantly in November, hinting at better prospects for consumer spending in the coming months. Aside from that, the OFHEO house price index revealed a 0.9% increase in house prices for September, which was much better than the predicted 0.1% uptick.

As though risk-taking wasn’t enough to hurt the safe-haven U.S. dollar, FOMC member Janet Yellen talked about the need for further stimulus for the U.S. economy, leading to further dollar weakness. She pointed out that the Fed has no plans to tighten monetary policy anytime soon since the U.S. housing market and consumer sector could still use some support.

Let’s move on to today’s events, shall we? The U.S. is set to release the ADP non-farm employment figures and show a 131K increase in private sector hiring for November. Bear in mind that, with the non-farm payrolls report coming up in a couple of days, traders are keeping close tabs on U.S. employment figures. With that said, you might also want to watch out for the release of the Challenger job cuts report which showed a 12.6% increase in layoffs last October. Mark your schedules for the release of those jobs figures starting 12:30 pm GMT.

Later on, the U.S. will release the Chicago PMI at 2:45 pm GMT. This report could show that the manufacturing industry expanded slightly in November as the index could climb from 58.4 to 58.5. A stronger than expected figure could fuel risk appetite yet again and trigger another U.S. dollar selloff. Also, keep an eye out for the pending home sales report due 3:00 pm GMT since the report could show a 1.4% rebound for October, erasing part of the 4.6% decline seen the previous month.

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What a wild and wacky Wednesday in the markets! With all the news that came out, the dollar was the biggest loser in yesterday’s trading action. The euro, pound, and the commodity dollars all soared from their recent lows, absolutely trampling all over the dollar bulls.

There were many factors that contributed to the dollar’s demise yesterday.

First was news that the People’s Bank of China (PBOC) cut its reserve requirement ratio by 50 points. This was done to help free up some cash and hopefully spur some lending and spending in the Chinese markets.

Next, we learned that it wasn’t just the PBOC who wanted to give the markets a lil’ boost. The Fed, ECB, BOC, BOE, BOJ, and SNB also announced a coordinated effort where all those central banks would lower the costs of emergency dollar loans by 50 basis points. This was done to ensure that foreign banks would have access to dollar funds and to help free up some liquidity. High five to you, Mr. Ben Bernake, for taking the lead on this one!

The release of U.S. economic data also boosted the high spirits in the market.

The ADP report came in much better-than-expected, as it indicated an increase in employment of 206,000, way higher than the anticipated 131,000. In addition, the previous month’s figure was revised up to 130,000, which hints at improving labor conditions.

Meanwhile, the Chicago PMI and pending home sales report also beat forecasts. The manufacturing PMI printed at 62.6, which was a nice improvement from the 58.5 we saw last month. Pending home sales also increased by a whopping 10.4% which was more than 7 times higher than the expected 1.4%. These figures helped contribute to the risk-taking we saw take place during the New York session.

Will the good times keep rolling tonight? We’ve got unemployment claims and the ISM manufacturing PMI reports coming in at 1:30 pm and 3:00 pm GMT respectively. Take note that jobless claims have been printing below the key 400,000 level for the past few weeks. Meanwhile, ISM manufacturing PMI is projected to come in at 51.6, which would be slightly higher than last month’s reading of 50.8. If we see another sub-400K report and a figure higher than 51.6, we could see more risk-taking take place tonight.

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Don’t look now, but I think the dollar is slowly starting to showcase its Mick Jagger moves again. EUR/USD traded lower from its intraday high of 1.3523 and ended the day at 1.3461. Meanwhile, USD/JPY closed 14 pips higher from its opening price at 77.70.

Compared to the past couple of days which were crazy action-packed, yesterday turned out to be a big snoozer without any updates from the euro zone and no market-moving report. The unemployment claims and ISM manufacturing reports from the U.S. failed to spark any rallies on the charts. The number of people who filed for unemployment benefits last week rose to 402,00 from 396,000 the week prior and upset the consensus which was for a more modest figure of 390,000. Meanwhile, the overall sentiment of managers in the manufacturing sector was up in November as the PMI came in higher at 52.7 than October’s 50.8 reading, and topped the 51.6 forecast.

Some market junkies are speculating that because we didn’t see the positive momentum from Wednesday carry over to yesterday’s trading, it may only be a matter of time until risk aversion comes back to haunt higher yielding currencies and boost the safe haven currencies (the dollar and the yen).

However, I don’t think we’ll see any big changes in market sentiment until next week when EU leaders meet. For the meantime, the U.S. NFP report for November will most probably provide us with a bit of action on the charts today.

Due at 1:30 pm GMT, it is expected that there was a net total of 120,000 jobs added in November and the unemployment rate is anticipated to remain steady at 9.0%. A few analysts are saying that the NFP report might reflect the positive growth we saw from the ADP report earlier this week. Keep in mind that many consider the ADP as a good leading indicator of the NFP.

Given the current market sentiment though, a positive reading may spark a risk rally and be bearish for the dollar. On the other hand, a negative NFP report could highlight the dollar’s safe haven reputation. That’s just my two cents though. Be sure to be careful trading today, ayt?

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Talk about a topsy-turvy day! The dollar was off to a bad start during yesterday’s trading as EUR/USD rallied during beginning of the London session. However, at the wake of the New York session, the pair tumbled from its intraday high of 1.3487 and the dollar ended the day with a 42-pip win as the pair closed at 1.3395.

Risk appetite spurred higher-yielding companies earlier on in the day as investors grew optimistic that agreements were being established between Germany and France. However, reports of the S&P putting the entire euro zone bloc on a downgrade watch sparked risk aversion. Uh oh. And of course, the worse-than-expected economic reports from the U.S. only fueled the sentiment even more.

The ISM non-manufacturing PMI for November came in much lower than anticipated at 52.0. Analysts had predicted the index to print higher than its previous reading of 52.9 at 53.6 after seeing positive Black Friday sales, ISM manufacturing, and NFP reports for the month. Meanwhile, factory orders for October also disappointed expectations, printing a 0.4% decline when a more modest contraction of 0.2% was predicted.

Our forex calendaris blank for reports from the U.S. today. So if you wanna make pips, be sure to keep tabs on updates on the euro zone. Good luck!

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Risk was back on yesterday, which means the dollar ended up on the losing side of the battle. The U.S. dollar index, which tracks the performance of the currency versus other majors, found itself sitting at the 78.94 level by the end of the day after opening at 78.96.

It was quite a wild ride yesterday as news headline became the driving force behind the dollar’s price action. In the beginning, the dollar performed strongly thanks to news that Standard & Poor, a global credit rating agency, placed the long-term sovereign debt of 15 European countries on negative outlook.

However, the dollar-buying did not last long. Market sentiment quickly recovered when some positive words with regard to reaching long-term solutions for the Europe’s structural problems in the upcoming EU summit were said by political leaders.

The U.S. economic calendar presents nothing of interest today, so don’t expect any major moves from the Greenback. I suspect we’ll see a lot of rangebound movement this week as traders simply sit on the sidelines in anticipation of the end-of-year EU summit on Friday.

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It was another day of consolidation for the dollar as there was no major catalyst to drive the markets. EUR/USD traded within a tight 100 pips range and closed at 1.3403, just 3 pips above its opening price. Meanwhile, AUD/USD is still trading below the 1.0300 handle and is continuing its recent consolidation.

It seems as if everyone is waiting for the upcoming EU Summit meetings to see if any progress is made with regards to fiscal unity in the euro zone. There have been some talks of disagreement on some issues, more specifically on that of combining the EFSF and ESM. If this turns out to be true and we see a lack of action in this week’s meeting, it could cause spark more uncertainty in the markets and allow the dollar to slowly creep higher.

For today, all we’ve got is weekly initial jobless claims data coming in at 1:30 pm GMT. Once again, jobless claims are expected to hover around the key 400,000 area, so we shouldn’t see any strong reactions to the release.

Do keep an eye out near the start of the New York session though, as the ECB will be releasing its interest rate decision. My spies tell me that the ECB might just cut rates today, so this might just spark some volatility in the markets.

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It seemed that the markets were playing with the Greenback’s feelings yesterday as the U.S. currency was initially let down then cheered up in an instant. EUR/USD reached a high of 1.3460 then ended the day at 1.3340 while USD/JPY dipped to 77.14 before closing at 77.70. Hooray for volatility’s return!

At last! Most dollar pairs were able to break out of their respective ranges yesterday as the ECB rate statement ushered volatility back in the markets. It wasn’t so much about the 0.25% interest rate cut since this was already widely expected, but apparently their head honcho Mario Draghi downplayed the role of the central bank in dealing with the euro zone crisis. Of course that was more than enough to disappoint a lot of market participants since many were hoping that the ECB would step up its role. Get the rest of the details by reading my euro zone economic commentary!

As for U.S. economic data, initial jobless claims data came in better than expected as the report printed 318K in first-time claimants, which is less than the 397K consensus. This marks its lowest reading in nine months and that’s good news for the jobs market which enjoyed a considerable drop in the unemployment rate for November.

Today, the U.S. is set to release its trade balance and consumer confidence data. Their trade deficit is expected to widen slightly from 43.1 billion USD to 43.5 billion USD in October. Meanwhile, the consumer confidence report could show that Americans became more optimistic about their economy this month as the index is expected to climb from 64.1 to 65.6. Keep an eye out for those reports starting 1:30 pm GMT!

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A somewhat better-than-expected EU Summit in the euro region turned investors’ attention away from the U.S. reports and pushed the low-yielding Greenback lower against its major counterparts. Heck, EUR/USD ended up closing 31 pips higher than its open price after dropping to an intraday low of 1.3281!

As it turned out, the markets had so little expectations on last Friday’s EU Summit that the lack of bloodbath alone was enough to support risk appetite for most of the day. In the summit, the European leaders worked on making changes in the original EU Lisbon Treaty to automatically sanction member states with high budget deficit.

Not only that, they also made a bit of progress on assuring investors won’t be taking much losses from buying government bonds. Lastly, the meeting also dampened rumors of a common bond for the EU members.

Over in the U.S., the economic reports released also gave investors reason to hold off from selling their assets and starting the holiday vacation early. The trade balance report showed the country’s trade deficit for October shrinking to its lowest level this year at 43.5 billion USD, while preliminary reading of the University of Michigan consumer sentiment clocked in at 67.7, the highest reading since June. Booyah!

Will the U.S. follow through with more positive economic reports this week? Only the federal budget balance report at 7:00 pm GMT is scheduled for release today, but tomorrow at 1:30 pm GMT we’ll get hold of the U.S. retail sales figures. Not only that, the IBD/TIPP economic optimism is due for release, along with the FOMC statement at 7:15 pm GMT.

On Thursday we’ll see more of the potential market-moving reports, starting with the PPI report, jobless claims, current account, and the Empire State manufacturing index at 1:30 pm GMT, followed by the TIC long-term purchases numbers at 2:00 pm GMT. Next, the industrial production report will be released by 2:15 pm GMT and the Philly Fed manufacturing index will cap the day by 3:00 pm GMT. Oh, and have I mentioned that the CPI report is due on Friday at 1:30 pm GMT?

Good luck in your trading this week, kiddos!

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The dollar channeled its inner Tim Tebow and powered through the charts in yesterday’s trading. It gained against all of its major counterparts, bagging 182 pips from the euro, 60 pips from the pound, 126 pips from the aussie, and 22 pips from the Japanese yen.

Despite the lack of economic reports, it looks like the dollar didn’t run out of piptorade yesterday. At the aftermath of the EU Summit, renowned credit rating agency Moody’s, announced that it was unsatisfied with the outcome of the meeting. In fact, hotshots at the agency were so disappointed, they warned that some EU countries could be downgraded within the following month. Yikes!

With that said, make sure you keep an ear out for what credit rating agencies have to say. Remember that S&P has also put 15 EU countries on credit downgrade watch and some market junkies are expecting to see them act on their statement sometime this week.

Also, make sure you don’t miss the U.S. retail sales report for November which is due at 1:30 pm GMT. Consumer spending for the month is seen to have increased from 0.5% to 0.6%. Meanwhile, excluding volatile items, the core retail sales is eyed at 0.5%.

Another potential market-mover in today’s trading is the FOMC statement later at 7:15 pm GMT. No one is expecting the Fed to hike interest rates, however, it’s still worthwhile to hear what Fed Reserve Chairman Ben Bernanke has to say. Watch out for clues about the central bank’s future monetary policy. If the head honcho hints that the possibility of QE3 has diminished with the string of positive reports we’ve recently seen from the country, the dollar could rally even more!

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Oh, momma! Thanks to an onslaught of bearish reports across the markets, the dollar was able to triple roundhouse kick its major counterparts down the charts. EUR/USD fell to its 11-month low at 1.3029, while USD/CHF rocketed past its previous day high and ended the day at .9464. What gives?

A lot of things, apparently. For one thing, the investors weren’t happy that Germany continues to reject the proposal of increasing the European Stability Mechanism’s (ESM) 500-billion EUR budget. The refusal highlighted the region’s lack of cooperation when it comes to solving debt problems, and fueled risk aversion in markets.

And then there were also U.S. reports to consider. The retail sales reports from the U.S. largely missed expectations, printing only a 0.2% growth in November when market geeks were pegging the growth figure at 0.6%. Looks like the Black Friday sales didn’t help as much as analysts first thought! The disappointing figures not only dragged on the U.S. stocks, it also suggested that a faster employment growth is needed to fire up retail sales.

Last but definitely not the least is the Fed’s FOMC statement released a couple of hours ago. In its statement, the central bank maintained its stance on its interest rates, saying that a low rate might be warranted at least until mid-2013. But what disappointed market players more is the Fed’s lack of signals to launch a QE3. Though the Fed kept the option open for next year, the lack of QE rhetoric was enough for the dollar bulls to maintain their momentum.

Aside from the OPEC meetings, no major report is scheduled for release in the U.S. today. Keep your eyes peeled for reports from the euro zone though. Who knows, we might see more risk sentiment-driven price action today!

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Hooray for the Greenback! Thanks to another run of risk aversion, the U.S. dollar was able to bag gains against its major counterparts yesterday. EUR/USD ended 19 pips below the 1.3000 major psychological level while USD/JPY closed 5 pips up from its 77.99 open price. Will we see another safe-haven rally today?

There were hardly any hard-hitting reports on yesterday’s schedule, which meant that traders focused most of their attention back on the euro zone debt situation. From what I gathered from reading Forex Gump’s article on the possibility of EUR/USD breaking its yearly lows, there are still plenty of financial threats in the region and it doesn’t help that their leaders can’t seem to come up with a strong solution.

The U.S. is set to release a bunch of economic reports, namely its PPI, weekly jobless claims figure, current account balance, TIC long-term purchases data, industrial production, Empire State manufacturing index and Philly Fed index today. Whew! That’s a lot of top-tier reports so make sure you stay on your toes for those releases starting 1:30 pm GMT.

Producer price levels are expected to be up by 0.3% in November after slipping by 0.3% during the previous month. The core version of the report, which excludes food and energy prices, could show a 0.2% uptick for November after staying flat in October.

Weekly jobless claims are estimated to come in at 389K for last week, a tad higher than the 381K figure for the other week. A higher than expected figure would mean that there were more people who filed for jobless claims for the first time, which could be negative for the U.S. labor market.

The current account balance could show that the deficit narrowed from 118 billion USD to 108 billion USD in the third quarter. Both manufacturing indices due today are expected to post improvements, with the Empire State index projected to climb from 0.6 to 3.1 and the Philly Fed index expected to rise from 3.6 to 5.1. If the actual figures come in better than consensus, it would reflect that the U.S. manufacturing industry’s expansion is stronger than expected.

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After three days of winning across the board, the dollar finally gave up some of its gains yesterday. The U.S. dollar index fell 77.90 by the end of the U.S. trading session, 14 percentage points from its opening level that day.

The dollar’s losses could be attributed to increased tolerance of risk. There were a couple of economic data that helped temper risk aversion. For instance, both the weekly jobless claims and Philadelphia Fed Manufacturing index came in better than expected.

There were some negative news too though. The Core producer price index (PPI) failed to meet forecast and only printed a 0.1% rise. The TIC Long-term purchases was also only at 4.8 billion USD, significantly lower than the 53.4 billion USD initially predicted. Lastly, the report on industrial production, which was slated increase 0.3%, showed the opposite and published a 0.2% decline.

Today, the only major event that we need to keep tabs on is U.S. consumer price index (CPI) at 1:30 pm GMT. The market is expecting inflation to improve to 0.1% from last month’s -0.1%.

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The Greenback probably needed a breather last Friday as it paused from its rallies and ended lower against most of its major counterparts except for the Loonie. Did we really see an improvement in risk sentiment or was that just a slight pullback?

It seems that the lack of bad news from the euro zone for the past few days allowed the higher-yielders to have a relief rally before the week came to a close. Another reason for the risk rally we saw last Friday could be profit-taking by traders who covered their short positions before the December holidays.

On the economic front, data from the U.S. came in mixed last Friday as core inflation rose by 0.2% while headline inflation stayed flat in November.

There aren’t any top-tier reports due from the U.S. today but the action will pick up on Tuesday as the building permits and housing starts data are set for release. Stronger than expected figures could fuel risk appetite and cause the Greenback to lose ground again.

Keep in mind that existing home sales and durable goods orders data are the only red flags left on the U.S. calendar for the rest of the week and, with lower liquidity in the markets these days, those reports have the potential to cause huge moves across the charts. Stay on your toes!