Daily Economic Commentary: United States

Trading Discussion News and Economy
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The Greenback had a terrible case of Monday blues as it lost ground against most of its major counterparts. EUR/USD landed back above the 1.3000 handle while GBP/USD reached a high of 1.5603. Will these risk rallies last?

The U.S. didn’t release any economic reports yesterday as most traders celebrated the Chinese New Year away from their trading desks. Today, only the Richmond manufacturing index is set for release from the U.S. The index is expected to climb from 3 to 6 this month, reflecting a slight improvement in manufacturing conditions in Richmond. Keep an eye out for that release at 3:00 pm GMT.

No other economic figures are due today but make sure you keep close tabs on President Obama’s State of the Union address sometime during the U.S. session. His speech could contain clues on what the U.S. government could focus on when it comes to fixing their economy, so you shouldn’t miss out on that!

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Mixed trading for the scrilla yesterday, which took some bumps and bruises versus the pound and Canadian dollar, but managed to scrape by versus the euro. Now that we’ve actually got some red flags coming up from the United States, what could be in store for the Greenback today?

First up, we’ve got pending home sales figures coming in at 3:00 pm GMT. Word is that pending home sales dropped by -0.6% in December, after we saw increases of 7.3% and 10.4% in November and October respectively. Not too surprised here though, as we shouldn’t expect many contracts to be signed during the holiday season.

Later on at 5:30 pm GMT, our friends over at the Federal Reserve will be releasing its FOMC statement and interest rate decision. Take note that we’ve seen many contrasting views and comments from FOMC members over the past couple of weeks, so it should be interesting to see what comes out of this statement.

One thing that you can bet on though is a spike in volatility once the statement is released. If you feel like you can’t handle the action, there’s no shame on sitting in the sidelines and waiting for the smoke to clear!

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We didn’t get mixed results this time around! Practically everyone was anti-dollar yesterday! The Fed’s decision to keep monetary policy highly accommodating led to big gains in equities, commodities, and high-yielding currencies. As a result, the USDX trickled down from 80.30 to 79.89.

Looks like the Fed has decided to change its mind! Yesterday, the central bank announced that it’ll be extending its period of very low interest rates for another year. That means we’ll have until late 2014 to enjoy these extremely low interest rates, folks!

Adding to all the dovishness, Ben Bernanke said that we may even see more bond purchases from the Fed. sniff sniff Is that QE3 that I smell?

In any case, the markets surprisingly took all this news well, even though it basically implies that the Fed’s outlook for the economy has deteriorated. They felt that the long period of low interest rates and the willingness to buy more bonds will make borrowing more affordable and will ultimately translate to higher spending in the private sector.

On another note, the Fed’s first release of interest rate forecasts seem to be confusing markets rather than enlightening them. 3 FOMC members predicted that the Fed will hike rates this year, 3 expect a raise in 2013, 5 in 2014, 4 in 2015 and 2 in 2016. So who are we to believe?!

The onslaught of heavy events continues today as the U.S. publishes durable goods orders data at 1:30 pm GMT. Look for the report to print a 2.1% increase following the previous month’s 3.7% uptick. The core durable goods orders report, on the other hand, is forecasted to show a 0.9% rise after posting a 0.3% increase the previous month.

At the same time, we’ll take a look at the weekly initial claims report. Survey says we’ll see unemployment claims rise from 352,000 to 371,000.

Last but not least, new home sales data will be released at 3:00 pm GMT. Will it follow in the footsteps of yesterday’s pending home sales report (-3.5% actual vs. -0.6% forecast) and disappoint? Or will it deliver an upside surprise and print above the expected 321,000 figure? Tune in to find out!

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Could the dollar’s suffering be coming to an end soon? While most of the major currencies posted new high versus the greenback, most of them gave back their gains by the end of the day, and in EUR/USD’s case, even allowed the dollar to edge higher.

The mix of positive and negative reports released during the New York session was probably the main culprit in yesterday’s midday reversal.

Early on, we saw risk spike up, as durable goods orders came in much better-than-anticipated, rising 3.0% last month, after it was projected to rise by just 2.1%. Meanwhile, core durable goods – which doesn’t include high ticket items like airplanes that regular Joes like you and I can’t afford – rose by 2.1%, more than double the 0.9% expectation.

Later on however, we received some disappointing unemployment claims figures and new home sales data and this took the air out of the market. Jobless claims rose to 377,000, after they were sitting nicely at 356,000 last week.

Meanwhile, the annualized rate of new home sales fell to just 307,000, way below the 321,000 forecast. This led to a sell-off in the equities markets, which in turn fed risk-off moves in the currency markets.

For today, we’ve got the advance GDP report lined up at 1:30 pm GMT. Rumor has it that the U.S. economy actually grew by an impressive 3.0% over the last quarter of 2011. Take note that this is the first of three versions that are released and has the highest chance of eliciting a strong market reaction.

Later on at 2:55 pm GMT, the revised University of Michigan consumer sentiment report will also be released. The index is expected to print at 74.2, just slightly above the 74.0 reading we saw in the initial release.

Stay tuned when these reports are released, as you never know how the markets will react! Good luck trading and make those pips!

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And just when investors were starting to get over the Fed’s dovish FOMC statement, negative data from the U.S. were released and reminded markets that QE3 is indeed a real possibility. Consequently, the Greenback was unable to bring sexy back in Friday’s trading. Boo!

It was reported on that the U.S. economy only grew by 2.8% in the last quarter of 2011. As if the figure coming in lower than the anticipated 3.0% uptick wasn’t bad enough, we also saw that Q3 2011 GDP was revised down from 2.5% to 1.8%.

Initially, the dollar rallied after the release of the report as EUR/USD dropped to the 1.3100 handle. However, because the negative figure only affirmed the Fed’s prediction that QE3 might be needed to prop up the economy, the dollar quickly gave up its initial gains. EUR/USD traded higher and closed 116 pips above its opening price at 1.3218.

With that said, I have a strong feeling that the dollar’s fate on the charts this week will be heavily influenced by the economic reports we have scheduled from the U.S. The NFP report for January which is due on Friday will most probably cause a lot of volatility on the charts. So be sure you don’t miss that as the highly-anticipated data will probably affect the Fed’s decision when to provide the economy with more stimulus.

As for today, we only have the PCE report on tap. It is said to be the Fed’s preferred measure of inflation so a figure better than the 0.1% forecast will probably be dollar-positive.

Aside from the reports though, keep an ear out for updates on the EU economic summit. The lack of any concrete agreements between EU leaders will probably cause risk aversion and boost the dollar in today’s trading.

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After weeks of trying, the dollar was finally able to bring sexy back yesterday! For the first time in weeks, the dollar was able to take away solid pips from its higher-yielding counterparts. While EUR/USD dropped an awesome 100 pips to end at 1.3130, GBP/USD fell 34 pips to 1.5702. The question is, will the dollar let these pips slip through its fingers today or will it extend its rally?

We got mixed data from the U.S. yesterday. On one hand, the core PCE price index delivered an upside surprise by printing an increase of 0.2%, twice the anticipated uptick.

On the other hand, last month’s personal spending report revealed that flat growth. Bummer! But while this is bad news for the retail sector, which relies on personal spending to boost sales and growth, it could also have positive implications for households. It could mean that our bros in the U.S. are finally beginning to save their dough!

With the way the markets have been acting this morning, it seems as though the dollar’s rally may be short-lived. It’s already being sold off like crazy!

Let’s see if today’s reports can shift sentiment in favor of the dollar once more.

At 2:45 pm GMT, the Chicago PMI will be available. Expect it to register a reading of 63.1 after posting a 62.5 last month. Considering that New York and Philadelphia posted sweet gains in manufacturing recently, we could very well see similar results from Chicago.

After that, the U.S. will roll out its monthly CB consumer confidence index, which is slated to increase from 64.5 to 68.2. Catch the action at 3:00 pm GMT!

Keep in mind that positive results from these reports could spur demand for the scrilla!

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The dollar’s scorecard was as mixed as a bag of M&M’s in yesterday’s trading. While it was able to rally against the euro, snatching a 50-pip win as EUR/USD closed at 1.3080, it gave up 52 pips to the pound as GBP/USD closed at 1.5757.

The disappointing roster of economic reports from the U.S. might have kept the dollar from scoring wins across the board. Let’s take a look at the data we got yesterday, shall we?

S&P reported yesterday that home prices continued to decline in November, falling by 3.7% after dropping by 3.4% the month prior. The HPI (house price index) also disappointed expectations which was for a more modest contraction of 3.3%

The Chicago PMI also only confirmed fears that the manufacturing sector is still not picking up. It came in lower than the 63.1 forecast at 60.2 for January.

Lastly, there was the Conference Board’s consumer confidence index which showed that optimism wasn’t as high in January as it was a month ago. The index printed lower at 61.1 for this month, following the 64.8 reading we saw for December. It also disappointed the consensus which was for an increase to 68.2.

But don’t fret! A few market junkies say that it’s all good in the hood as they speculate that the rally in higher-yielding currencies will soon be over. They may be on to something! After all, we still haven’t heard of any positive developments from the euro zone, particularly about Greece’s debt deal. It may only be a matter of time until investors run out of patience and risk aversion kicks in again.

That doesn’t mean you can just miss the reports we have for today though. No sir! We have a couple to top-tier reports on tap which could rock the dollar’s socks. First up is the ADP non-farm employment change report seen to come in at 189,000 later at 1:15 pm GMT. Then at 3:00 pm GMT, the ISM Manufacturing report is anticipated to print at 54.6.

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The combination of worse-than-expected economic data from the U.S., rumors that the Greek swap deal happening, and the solid results of the German and Portuguese bond auctions sparked a wide-reaching case of risk appetite yesterday. As a result, the dollar took a hit across the board, with the currency posting a 72-pip loss against the euro and a 71-pip fall versus the pound by the end of the day.

In the U.S., the ISM manufacturing PMI printed a reading of 54.1, slightly below the 54.6 figure initially expected. Meanwhile, the ADP non-farm employment change came in with a net gain of 170,000, lower than the 189,000 net increase consensus.

Today, the U.S. economic calendar presents nothing major, so we could see a bit of consolidation ahead of the non-farm payrolls tomorrow. In any case, do keep an eye out for the weekly jobless claims report. It will be released at 1:30 pm GMT and is slated to show that 373,000 people claimed for unemployment insurance for the first time last week. The forecast is a 4,000 lower than the week prior.

Federal Reserve Chairman Ben Bernanke is also set to speak at 3:00 pm GMT. He’ll be talking about the economic outlook and the federal budget in Washington.

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The dollar’s price action was as mixed as a bag of beans yesterday as traders look forward to the big NFP numbers coming up in a few hours. EUR/USD ended the day with only a 7-pip fall to 1.1.3145, while USD/CHF closed with an 8-pip gain to .9168.

The Challenger job cuts report revealed a 38.9% increase in layoff intentions in January, which pretty much reaffirmed the slightly weaker-than-expected ADP report earlier this week. Meanwhile, the initial jobless claims clocked in at 367,000 last week, a small improvement from the expected 373,000 figure.

Bernanke also got some attention yesterday when he relayed the Fed’s concerns over the employment numbers. He said that while unemployment figures are improving, there’s still a long way to go before we see any sustainable growth in the numbers.

Today at 1:30 pm GMT we’ll get hold of the big non-farm payrolls report. For the noobs out there, you should know that the data is probably one of the more closely watched since it gives a good estimate on the U.S. employment situation, which is one of the biggest concerns of the government.

If the report prints way weaker than many are expecting, then we might probably see the dollar weaken against its counterparts as it supports more QE from the Fed. Of course, it can also trigger risk aversion, which would then strengthen the dollar.

In any case, make sure you stick around to see this report, aight? The U.S. unemployment rate and average job earnings report will come out at the same time, while we’ll also see the ISM non-manufacturing PMI at 3:00 pm GMT.

Good luck in your trades today, folks!

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Is this a return to fundamentals we’re seeing? Thanks to the better-than-expected non-farm employment change, the Greenback was able to stay afloat versus other major currencies. The U.S. dollar index ended the U.S. trading session where it started, forming a doji-type candlestick.

The U.S. employment report showed that an impressive 243,000 net jobs were added in January. It also revealed that unemployment fell to 8.3% from 8.5%. Average Hourly Earnings remained unchanged with a 0.2% growth though.

U.S.'s forex calendar for the week is relatively light as only a couple of medium-tier events are scheduled. Let me list 'em down for you one by one.

On Tuesday, at 3:00 pm GMT, Federal Reserve Chairman Ben Bernanke will testify in front of the Senate Budget Committee. He’ll discuss the country’s economic outlook as well as the Federal budget. His speech is important because it can give us clues on the Fed’s monetary policy.

On Thursday, at 1:30 pm GMT, the weekly unemployment claims will be published. The market is expecting the report to show a 390,000 figure, which is slightly higher than the previous report.

On Friday, both the U.S. trade balance and Preliminary University of Michigan consumer sentiment survey will be released. The trade balance is expected to print a 48.2 billion USD deficit while the consumer sentiment survey is predicted to show a 74.3 reading.

Given as to how the Greenback gained on better-than-expected data last Friday, it seems that it is fundamentals that are dictating price action. If we see the upcoming reports beat forecast, then it is likely that the dollar will rally again!

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Did the traders go off on a Super Bowl holiday or something? Thanks to the lack of economic report from the U.S., the dollar barely moved against its counterparts yesterday. EUR/USD dropped to an intraday low of 1.3028 on concerns about Greece, but it soon ended the day 11 pips higher than its open price.

For today we’ll see if the dollar bulls and bears will get back to the grind as a few economic data are scheduled for release. At 3:00 pm GMT Big Ben Bernanke from the Fed is scheduled to testify in front of the Federal Budget Committee in Washington, which will be shown at the same time the IBD/TIPP economic optimism data is released.

Then, at 8:00 pm GMT we’ll get hold of the consumer credit report for December, which is expected to clock in at 7.7 billion USD compared to its 20.4 billion USD figure in November.

Stay sharp and watch these report closely, fellas!

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Aaaah, there’s nothing like the combo of risk appetite and dovish remarks to ruin the dollar’s day. It lost against all of its major counterparts yesterday save for the yen. EUR/USD closed 122 pips above its opening price at 1.3253. Meanwhile, GBP/USD ended the day at its 3-month high at 1.5900.

From what I’ve heard, it seems that there was renewed optimism on Greece coming into terms with its creditors in making a debt deal. Of course, it also didn’t help that Fed Reserve Chairman Ben Bernanke sounded pretty dovish in his testimony to the Senate Budget Committee.

Despite the stellar NFP report for January, he remarked that the labor market still has a “long way to go.” This, along with his comments about recovery being disappointingly slow and inflation being on the down low, hinted that QE3 has not been completely ruled out. And so, that only fueled the dollar sell-off.

If Fed Reserve Bank of San Francisco President Williams affirms talks of QE3 when he makes his speech later today at 3:40 pm GMT, we may just see the dollar trade lower against its counterparts. So keep an ear out!

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Looks like the dollar bulls finally woke up on the right side of the bed! With the lack of economic report in the U.S., traders focused on their worries over a Greek debt deal being reached. This is probably why EUR/USD only rose by a mere 5 pips while GBP/USD dropped by 82 pips to 1.5819.

As I mentioned in my euro write-up, some investors will continue to be worried over the European officials reaching a deal in time for Greece to pay up its debts unless the those officials actually present a concrete plan.

For those who are looking for market-moving U.S. economic reports you might have to wait till tomorrow. Today we only have the initial jobless claims report at 1:30 pm GMT. The data is expected to come in at 380,000 against last week’s 367 reading, but a surprisingly stronger number might boost the dollar against its counterparts for another day.

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The dollar received mixed reviews against its major counterparts yesterday. It rallied against the yen, weakened against the euro, and ended virtually unchanged against almost everything else! Let’s see if it can score a unanimous decision before the weekend!

We didn’t really have much data to work with yesterday considering that the only economic release on tap was the weekly unemployment claims report. And boy, did it give good news! Claims for unemployment benefits fell from 373,000 to 358,000, which I’m told is barely above the 3-year low! Sweet!

If you’re hungry for more U.S. reports, today’s releases should do the trick!

We have the trade balance due at 1:30 am GMT and they say the trade deficit will widen from 47.8 billion USD to 48.1 billion USD.

After that, at 2:55 pm GMT, the preliminary University of Michigan consumer sentiment will be available. Look for the index to fall from 75.0 to 74.4.

Last but not least, my boy Ben Bernanke will take the stand and deliver a speech about “Housing Markets in Transition.” Tune in at 5:30 am GMT just in case he drops hints about the Fed’s next move!

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The market’s doubt about Greece regarding the implementation of all the agreed austerity measures spurred a bout of risk aversion and a wide-reaching case of U.S. dollar strength last Friday. EUR/USD, for instance, ended the day at 1.3173, more than 100 pips lower from its opening price during the Asian session.

Economic data that came out from the U.S. were mixed. The trade balance was slightly better than forecast as it printed a 48.8 billion deficit USD (consensus was a 48.1 billion USD deficit) but the Preliminary University of Michigan consumer sentiment survey failed to meet expectation. It showed a reading of only 72.5, and not 74.4 like anticipated.

This week, there’s a slew of of high profile events scheduled to happen. Let me go through each day of the week one at a time.

On Tuesday, watch out for the retail sales report. It is slated to show a 0.8% gain, while the core version of the report is predicted to show a 0.6% increase.

On Wednesday, we will see the TIC long-term purchases. The forecast is a 62.3 billion USD figure, a significant uptick from last month’s 59.8 billion USD. This means that the value of the long-term securities purchases by foreigners was bigger than the long-term purchases by U.S. citizens.

On Thursday, we’ve got the building permits and housing starts, producer price index, initial jobless claims, and Philadelphia Fed manufacturing Index.

The last report you need to keep tabs on is the CPI. A 0.3% gain in both the core and headline version is expected by the market.

Phew! As you can see, there are a lot of reports that will give the Greenback a lot of volatility this week. Make sure you have your forex seat belts on, folks!

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The Greenback had a mixed performance yesterday as it lost ground to the comdolls but pocketed some gains against the European currencies. It moved sideways against the yen but managed to close 3 pips up from its 77.55 open price. Will the Greenback find a clearer direction today?

The U.S. didn’t release any economic data yesterday, which probably explains the Greenback’s mixed performance. It seems that traders were still weighing the odds of a Greek default as they refrained from buying up the European currencies and put their money in the comdolls instead.

Today, the U.S. is set to print its retail sales figures at 1:30 pm GMT. The headline figure is expected to come in at 0.8% while the core figure could show a 0.6% uptick for January. If the actual figures meet or beat expectations, these would be nice rebounds over the bleak consumer spending figures seen last December. If you’re planning to trade this report, make sure you check out Forex Gump’s article on what to expect from the U.S. retail sales release.

Also due 1:30 pm GMT today are import prices data, which could show a 0.3% increase. Later on, Treasury Secretary Geithner is set to testify on the Fed’s budget before the U.S. Senate and after that, FOMC member Lockhart is scheduled to deliver a speech on his U.S. economic outlook.

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There was nothing mixed about the dollar’s performance yesterday! It ruled the charts just like how my girl Adele ruled the Grammys yo! It snatched 71 pips away from the euro, took 86 pips away from the Japanese yen, and gained 85 pips against the British pound! Talk about a sweep!

Despite weaker-than-expected retail sales data, the dollar had little trouble attracting buyers. U.S. retail sales clocked in a growth of 0.4% last month, just half the increase that economic fortunetellers had predicted. Though retail sales excluding car sales recorded a much better increase of 0.7%, it seems the labor market hasn’t improved enough to make consumers less picky about spending.

In other news, forecasts were right on the money when it predicted that import prices would increase by 0.3% in January. The increase, though not alarming, reflects highers costs for cars and oil. Looks like the U.S. won’t have to worry much about external inflationary pressures, since this is only the second increase in the past six months!

Now that that’s all behind us, we can focus on the heavy reports on tap for today!

Starting our day off at 1:30 pm GMT, we have the Empire State manufacturing index. Look for it to increase from 13.5 to 14.7.

Then at 2:00 pm GMT, the TIC long-term purchases report will be available. Survey says the balance of domestic and foreign investment likely shot up from 59.8 billion USD to 62.3 billion USD.

Last but definitely not least, the FOMC meeting minutes will flood the newswires at 7:00 pm GMT. Don’t miss this report! It could provide key insight on what the Fed will do next. Expect the minutes to show a hint of dovishness as the FOMC’s last statement revealed that most members aren’t expecting rates to increase within the next 3 years.

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When risk aversion flows firmly supporting the low-yielding dollar, who needs to see U.S. economic reports? Concerns on a possible Greece default dragged EUR/USD 125 pips from its 1.3192 intraday high, while USD/CHF also jumped by 29 pips to .9233.

As I’ve mentioned in my EUR write up, investors got frustrated over the lack of solid progress in Greece’s possible bailout fund. I mean, what’s the use of Jean Claude Junker, President of the Eurogroup, saying that there’s progress when markets aren’t actually seeing any? The frustration weighed on high-yielding currencies across the board, which helped boost the low-yielding dollar.

Good thing the investors were focusing on the euro zone because the U.S. economic reports certainly didn’t show anything to be proud of either.

Though the Empire State manufacturing index came in at a better-than-expected reading of 19.5 in February, the capacity utilization rate missed expectations by 0.1% at 78.5% in January. Not only that, the TIC long-term purchases data showed that demand for long-term U.S. financial assets plunged sharply in December, as there’s only a $17.9 billion demand from November’s $61.3 billion figure.

The latest FOMC meeting minutes wasn’t any help either, as it told us nothing we don’t already know. Aside from repeating Big Ben’s frustration over the slow employment and economic growth, some FOMC members also see more asset purchases in the future if economic data continue to disappoint expectations.

Speaking of economic data, we have a couple hitting us today, starting with the building permits, PPI, initial jobless claims, and housing starts all released at 1:30 pm GMT. After that, we’ll see Big Ben make a speech in Arlington, which will be followed by the release of the Philly Fed manufacturing index at 3:00 pm GMT.

Stick around to trade these reports, will ya?

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It looked as though the dollar was going to cruise to another big victory as it was in total control of the charts throughout the Tokyo session and most of the London session. But once the New York session got started, the dollar bears awoke from hibernation and tore the bulls apart! As a result, the dollar ended weaker against all of its major counterparts save for the yen and Kiwi.

Blame it on yesterday’s U.S. data, which was so positive that it sent traders on a risk taking spree!

For the first time in almost 4 years, weekly claims for unemployment benefits fell below 350,000. It clocked in at 348,000 last week, beating the forecasted 364,000 figure.

Furthermore, the Philly Fed manufacturing index managed to climb from 7.3 to 10.2 in February. The survey revealed that businesses remain optimistic for the future, which makes sense considering the report indicated improvements in general activity, new orders, and shipments from January. Let’s hope the manufacturing industry can sustain these gains!

On the other hand, housing starts and building permits didn’t deliver any big surprises as the two reports pretty much just fell in line with expectations. Housing starts rose from an annualized rate of 690,000 to 700,000 and building permits increased from 670,000 to 680,000.

The lone report to fall short of expectations was the PPI, which recorded a 0.1% increase rather than the forecasted 0.3% figure. Meanwhile, the core PPI surpassed expectations for a 0.1% uptick by posting a 0.4% surge.

Today, we only have CPI data on tap. Look for both the headline and figures to come in at 0.3%, and keep in mind that as long as inflation stays grounded, the door will remain open for QE3. Good luck, fellas! Make this day count!

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Tough day for the dollar, as it found itself on the losing end against its European counterparts last Friday. EUR/USD finished at 1.3156, up 23 pips from its opening price, while GBP/USD closed 34 pips higher at 1.5833. Will the dollar continue to get thrown around or will it show who’s boss in the forex ghetto?

Risk appetite continued to dominate the markets, as it seems that market players are positioning themselves ahead of a new Greek debt deal. Apparently, fund managers and traders are optimistic that a deal will get done by this week. This has helped spur a rally in higher yielding currencies at the expense of the dollar.

In other news, core CPI figures printed as expected 0.2%, indicating that rising inflation isn’t a major concern right now. What this means is that the Fed still has room to implement additional quantitative easing measures should it choose to do so.

Bankers will be off on holiday today, so we may not see much movement. Watch out for developments coming out from the euro zone though, as EU leaders will be meeting to finalize (or dump!) the Greek debt deal. If a deal is secured, we may just see risk appetite take over once again!