Daily Economic Commentary: United States

Trading Discussion News and Economy
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Why, thank you risk aversion! The Greenback enjoyed tons of winnings yesterday as weak data from economic powerhouses US and China spurred demand for safe-haven assets. Because of that, EURUSD sank back below 1.3000 and AUDUSD slid under the .9000 handle.

Equities and higher-yielding currencies started off on the wrong foot yesterday and started chalking up losses during the early Asian session. Apparently, China’s economic reports revealed that the Asian giant could be facing a slowdown. Most of their data, such as retail sales and PPI, posted weaker-than-expected results while industrial production grew at its weakest pace in almost a year.

Meanwhile, the US trade balance also fell short of expectations. Their trade deficit widened from 42.0 billion USD to 49.9 billion USD in June as imports outpaced exports during the month. This was particularly disappointing because the trade balance was expected to hold steady at 42.0 billion USD.

For today, the only top-tier report on deck is the weekly jobless claims figure. After logging in 479,000 in initial jobless claims a couple of weeks ago, the report is expected to show that only 465,000 people filed for employment benefits for the first-time last week. Keep an eye out for that report due 12:30 pm GMT since worse-than-expected results could stoke the Greenback’s safe-haven appeal once more.

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Make that three in a row! The Greenback squashed its major counterparts in yesterday’s trading as risk aversion continued to prowl the markets. However, its strength seemed to fade as the yen, Aussie, and franc put up a strong fight during the European and US session.

Only a couple of economic reports were released from the US yesterday and, guess what? Both came in weaker than expected! Weekly jobless claims amounted to 484,000, which is worse than the estimated 465,000 in first-time unemployment claims. This was also worse than the previously reported 482,000 in jobless claims, suggesting that recovery in the US labor market is still weak.

Meanwhile, import prices were reported to have increased by a measly 0.2%, half as much as the projected 0.4% uptick. Still, this marked a rebound over the 1.3% drop seen last June.

Better brace yourselves for the upcoming retail sales data, consumer confidence figures, and inflation reports. Inflationary pressures are expected to have made a comeback in July as the CPI is projected to show a 0.2% uptick during the month. The core version of the report could chalk up a mere 0.1% increase, slightly slower than the 0.2% rise seen in June. Watch out for the actual figure due 12:30 pm GMT.

Also due at 12:30 pm GMT is the July retail sales report, which could print a 0.5% increase, erasing the 0.5% decline in the previous month. Core retail sales could see a 0.3% rise for July, up from the 0.1% drop in June. Word on the street is that both inflation and retail sales figures could come in weaker than expected since some US retailers and clothing stores posted slower sales for the month.

Later on, at 1:55 pm GMT, the University of Michigan consumer sentiment report will be released. The index is expected to climb from 67.8 to 69.4 this month, signaling an improvement in consumers’ financial confidence and economic outlook. If this is the case, then it could have a positive impact on future consumer spending and economic growth. But if not, the Greenback could react negatively to worse than expected results since it could signal weak growth prospects.

Hmm, with all these economic catalysts on today’s deck, the Greenback could have another chance of extending its winning streak. The question is: Would risk sentiment prevail or would fundamentals determine price action? We’ll find out later on!

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Talk about piptastic! The dollar continued its winning streak against most of its counterparts in Friday’s trading. EURUSD traded lower after it peaked at 1.2907 and closed the week at 1.2753, giving the dollar a 74-pip win against the euro. Fist bump, whaddup!

Friday’s economic reports ended the dollar’s weeklong rollercoaster-ride on the charts on a slightly upbeat note. Well, that is if you take into consideration the Fed’s oh so pessimistic outlook on the US economy. Let me give you a recap.

The Census Bureau announced that the country’s retail sales grew by 0.4% in July which was only 0.1% lower than what the analysts predicted. Not that bad eh? Digging deep into the report I discovered that retailers were pretty generous during the month giving consumers pretty big discounts. Aww, ain’t that sweet? However, I think it was because they felt that they had to give consumers more incentives to buy and not because they just felt like being super nice.

Anyway, the hefty discounts can probably explain why the prices for goods excluding food and energy only increased by 0.1% in July after rising 0.2% reading in June. But nonetheless, it still hit the market’s forecast.

There was also the University of Michigan Consumer Sentiment report which printed at 69.6, and overshot the market’s 69.0 forecast. It came out as a pleasant surprise for the US economy, diverging from the IBD consumer optimism report which implied pessimism, with its July reading down to 43.6 from 44.7 in June.

Hmm, does this mean that the US economy is as healthy as a horse? Ha! I don’t think so. But these figures do suggest that consumer demand and optimism ain’t as bad as the Fed expected. I can still sense risk aversion lingering in the market as higher-yielding currencies faltered against the dollar and yen on the charts last Friday.

Let’s see what we have for the dollar today, shall we?

At 12:30 pm GMT, we have the Empire State Manufacturing Index which is expected to boost confidence on the US economy with the consensus up at 8.1 in August from July’s 5.1 reading. Next we have the Department of Treasury’s report on purchases of long-term securities at 1:00 pm GMT. Analysts are expecting that there was higher demand for US securities in June with the forecast higher at 36.3 billion compared to the previous month’s 35.4 reading. Then at 2:00 pm GMT, we have the NAHB Builders Survey for August which is expected to reveal an improvement in the optimism on the country’s housing market. The market anticipates the figure in August to be the first increase in four months with the consensus up at 15.0.

However, I don’t think any of these reports can reverse the Fed’s pessimism on the economy. If they come out worse than expected, they would probably just give the Fed more reason to add more quantitative easing sauce to the bland economy.

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“Hakuna No-Dollah” was the resounding tune in the FX market yesterday as traders ended the dollar’s winning streak. EURUSD traded higher after it dipped to an intraday low of 1.2734. It peaked at 1.2872 before it closed at 1.2825, giving the dollar a 67-pip loss.

Risk aversion sparked by Japan’s weaker-than-expected GDP figures might have boosted the dollar during the Asian session. However, reports from the US might have spooked away traders from the dollar. Let me give you the lowdown.

First there was the Treasury International Capital flow report which showed that the demand for long-term US securities only amounted to 44.4 billion USD during the second quarter. It fell short of the 45.7 billion USD forecast which raised concerns about central banks diversifying their reserves. Uh oh, I think the frustrating figures that the US economy has been printing are taking a toll on the dollar. The report also showed that a handful of countries, China being one of them, sold more dollars than they bought.

Then there was also the Empire State Survey which disappointed as the sentiment index printed a puny 7.10, and failed to hit the consensus 8.30 figure. This means that manufacturing executives in New York may not be as optimistic this August as the market expected them to be. Boo!

Lastly, there was the report from the National Association of Home Builders which might have done the dollar more harm than good. Home builders generally expect home sales to be weaker in the near future, as the index hit its lowest level in 17 months at 13.0. Yowza! It also missed the forecast which was up at 15.0.

Hmmm, it seems like price action is dictated by both risk aversion and fundamentals. I have a feeling that if today’s economic reports continue to disappoint, we may just see the dollar follow through on its losses. Let’s look at what we have for today shall we?

At 12:30 pm GMT, we’ve got the the producer price index for July which is anticipated to have increased 0.2% in July following a 0.5% decline in June. Along with that we have data on building permits and housing starts for the month which are projected to be at 58,000 and 56,000, respectively.

Then at 1:15 we have the industrial production report to watch out for. Industrial activity is expected to have heightened in July with the consensus at 0.5%, up from June’s 0.1% reading. We also have the capacity utilization rate, which is seen to have increased 74.6% from 74.1 in June.

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Did anyone watch Pip Wars Episode III: The Revenge of the Pips in the charts yesterday? Risk appetite once again reared its head in markets yesterday, as evidenced by the rise of comdolls against the greenback and the dollar’s upsurge against its fellow low-yielding currencies. EURUSD went straight up to close 60 pips above its open price at 1.2880, while USDJPY climbed by 16 pips from its open price at 85.49 after tapping an intraday low of 85.12.

The upside surprise in the industrial production reports in the US might’ve helped offset the disappointing building permits data, as industrial production increased by 1.0%, and capacity utilization rose to 74.8% from their July figures of -0.1% and 74.41%, respectively.

Producer prices, might have also had something to do with the dollar’s stance against other higher yielding currencies, as prices increased by 0.2% after declining by 0.5% last June. Remember, when producers pay more for their raw materials, they normally pass the buck for consumers to pay. Higher inflation normally leads to rate hikes… aw who am I kidding? The Fed won’t be raising rates any time soon!

The positive reports beat the 3.1% decline of building permits and the less-than-expected 1.7% rise in housing starts because they suggested the economy has enough fuel to keep it chugging in the coming months despite the cautious tone of the builders and the home buyers.

After an action-packed Tuesday, only the crude oil inventories report at 2:30 pm GMT will be released from the US today, but keep your eyes peeled for any reports that could affect risk appetite!

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The dollar’s scorecard was as mixed as a Long Island Iced Tea in yesterday’s trading primarily because of the absence of US economic reports.

It lost against some of its counterparts but thanks to the lingering risk aversion hangover of the market. It was able to get pipsy against the euro and post a 22-pip gain by the end of the day.

Unfortunately for the dollar, it was unable to get pip-drunk against the pound because of BoE’s relatively optimistic economic outlook and the Loonie because of a huge merger and acquisitions bid.

If you had a hard time gauging the dollar movement yesterday, don’t worry because we’ll have a few reports to sink our trading teeth into today. At 12:30 pm GMT we have this week’s unemployment claims data on tap. The number of people who filed for unemployment benefits is expected to have decreased to 478,000 after reaching its five-month high last week at 484,000.

Then, at 2:00 pm GMT, we’ll get a sneak peek on how America’s manufacturing sector is faring with the Philadelphia Fed Survey. The index was high up at 21.4 in May but it tumbled to 5.1 in July. Aaack! But analysts are confident that the manufacturing activity it has already bottomed out and will start gaining momentum again with the forecast for August up at 7.1.

Along with that, we also have the Conference Board Leading Index for July. It is expected to have increased to 0.2% during the month paring its 0.2% decline in June. This implies that the economy to have been better in July.

Err, the forecasts are quite divergent from the Fed’s pessimistic outlook. I would watch out for risk aversion if I were you. If the figures come out better than expected, we may just see the dollar get a leg up against other major currencies.

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The dollar woke up in the New York session feeling like Pip Diddy as it rock ‘n’ rolled on the charts thanks to risk aversion. EURUSD closed 40 pips lower at 1.2820 after it got rejected at the 1.2900 handle. However, the dollar’s “Imma fight ‘til I see the sunlight” attitude didn’t work against the yen or the Swissy.

If you still don’t know what made the FX market tik tok yesterday don’t worry because Pip Diddy’s here to give you the lowdown.

First, there was the unemployment claims report which revealed that the number of people filing for unemployment benefits rose to a nine-month high last week. How many were they, you ask? Half a million. Whaaaat the…yeah, that was what I said too. Analysts were expecting the number to have decreased after it printed at 490,000 the week before with the consensus was slightly lower at 480,000.

Then there was the Philadelphia Fed index which showed that manufacturing activity in certain states slowed to the point of contraction at -7.7 this month. The consensus was up at 7.2 following the July’s reading of 5.1, indicating that the market was anticipating business executives to be more optimistic. But noooo… tsk, tsk.

Yeah, the dollar was able to snatch a handful of pips from the disappointing figures but its losses against the yen and Swissy implies that there is increased concern about the recovery of the US. And this is bad, really bad.

We don’t have anything on tap for the dollar today so be careful with your trades. The lack of high-caliber economic reports today may calm investors of their risk aversion tantrums, and cost the dollar some pips. Good luck!

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All is fair in love and pip-war! Risk aversion continued to be the dollar’s friend as it gained across the charts last Friday despite printing less-than-stellar reports during the week. EURUSD ended the week at 1.2709 after hitting an intraday low of 1.2664 on dovish ECB comments. Meanwhile, USDJPY avoided another dip below the psychological 85.00 handle and closed 33 pips higher than its open price at 85.65.

Markets expected a snoozer last Friday since only Canada’s CPI was scheduled for the spotlight, but ECB member Axel Weber rocked the charts last Friday when he suggested that monetary policy in the euro zone should remain loose until 2011. This highlighted the need for stimulus in the region, and sent the currency bulls to low-yielding currencies like the dollar, yen, and franc.

Will this week’s reports make the dollar the king of the pip-hill? Only Kansas Fed President Thomas Hoenig is scheduled for a close-up today when he testifies before the House Committee on Oversight and Investigations at 2:00 pm GMT. Will he bring good news at the start of the week?

Data on US home sales will pop on the calendar for the next two days at 2:00 pm GMT. Analysts expect that new home sales remained at an annualized number of 330,000. If a disappointing lower-than-expected figure for the sales of new homes prints, it means that demand for houses remains weak despite the extension of the home-buyer tax credit, which is negative for the Greenback.

The unemployment claims on Thursday at 12:30 pm GMT will also be closely watched, especially after the data reached a nine-month high at 500,000 claimants last week. Will the US employment be any better this week?

The last chart-popper from the US this week will be the preliminary quarterly GDP on Friday at 12:30 pm GMT. Analysts expect the US economy to have weakened to a 1.5% growth from the first quarter’s 2.4% figure, but a weaker-than-expected number might inspire another wave of risk aversion in markets. Good luck in your trades this week!

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The Greenback was off to a slow start on Monday as it slid against most of its major counterparts during the Asian session. Even though the US didn’t release any top-tier reports yesterday, the Greenback’s action kicked into high gear as it made some gains during the US session.

In his speech yesterday, FOMC member Thomas Hoenig said that the US recovery was “abnormally slow” and that the decline in bank lending was a major concern. He once again reiterated his usual argument that the Fed should hike rates in order to accommodate the current expansion in the economy.

Today, the Greenback could be in for more action as the US is set to release its existing home sales report. This indicator has been posting declines for the past couple of months and is expected to print another drop in July. In fact, the decrease in existing home sales is projected to be worse this time around. It is expected to show that sales of existing homes slid from 5.37 million to 4.68 million during the month, reflecting the continued deterioration in the US housing industry. Watch out for the actual results due 2:00 pm GMT today since this could cause another round of risk aversion in the currency market.

Also keep an eye out for the release of the Richmond manufacturing index, which is expected to dip from 16 to 14 this month. Although this report is slated to have a minimal impact on the Greenback’s movement, a worse-than-expected figure could encourage more investors to flee to the safe-havens.

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Risk aversion reigned supreme yesterday as all the gloom and doom renewed demand for the safe-havens. Because of that, the Greenback scored tons of winnings against most of its major counterparts, except for the Swissy and the yen.

Fears of a double-dip recession became the talk of the town again, forcing the higher-yielding currencies to give way to the Greenback during the start of the European session. Soon enough, weak economic figures started pouring in, pushing more investors to flee to the safe-havens.

It didn’t help that the US existing home sales report came in much weaker than expected, thanks to the earlier declines in building permits. Good ole Forex Gump jolly well got it right! In one of his previous entries, he mentioned that the drop in building permits signaled further declines in home sales. True enough, existing home sales slumped from 5.26 million in June to 3.83 million in July. Oh boy, the US housing market is really in a rut right now…

Moving on, we’ve got more housing data on tap today as the US is set to release its new home sales report at 2:00 pm GMT. Would it mirror the disappointing results of the existing home sales report? Well, new home sales are projected to rise from 330,000 to 333,000 in July but I have a hunch that the actual figure could fall short of the consensus. If it does, brace yourselves for another round of risk aversion then!

Also due today are the durable goods data and core durable goods report for July. After posting negative readings for June, both reports are expected to print upticks this time around. Durable goods orders are estimated to rise by 2.9% in July while the core version of the report is slated to show a 0.6% increase. Watch out for the actual figures due 12:30 pm GMT.

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Hang in there, ‘ol buddy! The dollar managed to end the day with mixed results despite printing weak economic data yesterday. The greenback lost against the pound and the franc, but managed to gain against the euro and the yen. EURUSD closed only 23 pips below its open price at 1.2650. Meanwhile, USDJPY soared by 54 pips to close at 84.71.

The disappointing durable goods report opened the US trading session, printing a 3.8% decrease in durable goods not including transportation. This was a honey to the dollar bears as lower demand for long-lasting capital goods usually mean weak demand for equipment and software products.

The new home sales data also had the analysts running all over markets yesterday after it clocked in at an annualized rate of 276,000, the lowest level since 1963. Wow! That was back when Sean Connery was struttin’ his stuff as James Bond! With the data’s 12.4% drop, it’s no wonder double-dip recession is a trending topic among the market geeks!

Today all eyes are going to be on the weekly unemployment claims due at 12:30 pm GMT. After reaching nine-month highs at 500,000 last week, analysts expect the claimants to fall to 448,000. Will the data provide relief for the US economy, or will we see more signs of the not-so-yummy double dip?

The mortgage delinquencies report for the second quarter will also be published today at 2:00 pm GMT. Given the recent less-than-stellar employment and housing figures, something tells me that not many Americans would think of paying their mortgages first. After all, mortgage-payers who are late by at least one payment already rose to 10.06% last quarter.

Don’t even think of missing these reports!

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Too little, too late? Sentiments on the dollar put a crimp on its price action yesterday despite printing better-than-expected economic data. EURUSD capped the day off at 1.2716 after hitting an intraday high of 1.2765. Meanwhile, USDJPY remained below the psychological 85.00 handle after standing on its tippy-toes at an intraday high of 84.89.

Weekly unemployment claims dropped by 31,000 from last week’s 504,000 figure after the analysts pegged the number at 488,000. It’s just too bad that the upside surprise failed to put a smile on the traders’ faces. You see, while the decrease is all tear-jerking in its happiness, analysts think that the data is still in its critical levels.

The mortgage delinquencies (mortgages that are at least one payment late) for the second quarter should have also cheered on the dollar bulls when it clocked in at 9.85%, down from 10.06% in the first quarter. That’s the first drop since 2006 and the largest quarter-on-quarter decrease since 2005! The catch is, Mortgage Bankers Association also reported that the short-term delinquencies are on the rise. Drat! Will the US data ever have a good fight?

Judging from expectations for today’s data, it will be quite a while before we see some good news. The preliminary GDP report due at 12:30 pm GMT is estimated to drop to a 1.5% growth after the first quarter’s 2.4% figure, but word on the Wall Street is that markets are in for a bigger disappointment.

The consumer sentiment report by the University of Michigan is also due for its spotlight at 1:55 pm. The figure is estimated to rise to 69.8 from July’s 67.8, but I won’t be surprised if more people found it hard to feel giddy on the US economy.

The finale of the week would be US Fed Chairman Ben Bernanke’s speech at the Jackson Hole symposium at 2:00 pm GMT. Will he give comments on a possible quantitative easing? Don’t even think of missing this one, kids!

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We got a relatively quiet trading day to end last week’s snoozefest, as most pairs stayed within range. EURUSD and GBPUSD traded within ranges of about 100 pips, and finished just a few pips from their opening prices for the day.

On the economic front, we got mixed data, as GDP figures were revised to 1.6%, still much worse than the initial figure of 2.4%, but better than consensus at 1.5%. This was taken as good news, as there were a bunch of skeptics out there who were expecting much worse.

The University of Michigan consumer sentiment report on the other hand, was a little disappoitning, as printed a reading of 68.9. This failed to hit consensus of 69.8 or match last month’s score of 69.6. Consumers getting more pesimistic eh? Well, I can’t really blame them – economic recovery hasn’t been as smooth as we all want it to be!

Speaking of economic recovery…

Perhaps the reason why the markets we’re a little quiet was because traders were shocked and didn’t know how to react to my boy Big Ben Bernanke’s words late last Friday. No, the Fed Chairman did not explicitly say that the Fed would be implementing even more quantitative easing measures, but he did say that he was considering raising the Fed’s inflation goals.

Huwhaaat?! Remember, the Fed has a target inflation rate in mind whenever they implement monetary policy. However, inflation has remaind as subdued as Tim Duncan’s game face – no change whatsoever! So while this doesn’t mean that Bernanke will be hoping on his helicopter and droppin’ billions of dollars on the US economy just yet, I do think it opens the door for an extended period of stimulus.

But for now, traders will have to start rubbing their Forex crystal balls… or just wait a bit and gather more information to try and see what Bernanke has planned. Perhaps we’ll have a better idea once news reports are released this week. Let me tell you right now – this week could be a game changer in the Forex markets!

First, later at 12:30 pm GMT, the core PCE index will be released. Now, as I said, inflation has pretty much stayed steady, so I don’t expect today’s release to drift away from the forecast of a 0.1% increase in consumer prices.

Tomorrow, we could see a spike in volatility as the latest FOMC minutes will hit the markets at 6:00 pm GMT. Was the prospect of even more QE discussed at the latest meeting? If it was, could more fears of a… gulp… double dip recesion take over the markets?

And last but not least, we’ve got the ever-so-wonderful employment data to finish off the week. Will this month’s version of the NFP report highlight more weakness in the labor markets?

Ahhh so many questions to ask, but lucky for us, I do think that most of these will be answered by the end of this week. Stay tuned and buckle up – we may be in a for wild, wild ride this week!

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Summer may be almost over, but the dollar’s price action yesterday suggested that the risk aversion’s heat is still on till the break of dawn. The greenback lost against the yen and the franc, but gained on the pound and the euro. EURUSD went straight down by 96 pips from its open price at 1.2665. Meanwhile, USDJPY capped the day off at 84.56 after peaking at an intraday high of 85.91.

US data didn’t do much for the dollar, especially when core prices for personal consumption expenditures data showed that prices only rose by 0.1% in July. Personal income and spending, too, have failed to rock the charts when spending data hit the expected 0.4% growth, while the income report missed the 0.3% target at 0.2%.

Will we see more US-related action today? Big waves are scheduled to hit your screens, starting with S&P’s annualized home prices at 1:00 pm GMT. Home prices are expected to rise by 3.8% from May’s 4.6% figure, but a worse-than-expected number could add to the recent disappointments on the US housing market.

The Chicago PMI at 1:45 pm GMT is also expected to decrease to 57.3 but a lower number could mean that purchasing managers aren’t as goo-goo-eyed on the US economy as they were in July with a 62.3 figure.

The red flags in the US will start waving at 2:00 pm GMT when the CB consumer confidence index is released. The index number is expected to notch higher at 50.7 from July’s 50.4, but we just might see the currency bears feasting on the dollar if the data prints lower than expected.

The last song will come not from Miley Cyrus, but the Federal Reserve, when they give the hottest details on their last FOMC meeting at 6:00 pm GMT. Some say that the report will only echo Bernanke’s concern last Friday, but keep your eyes peeled for any surprises!

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Yeouch! The dollar got a small boo-boo when it slipped against most of its major counterparts yesterday. EURUSD fell to a 1.2672 close after reaching an intraday high of 1.2744. Meanwhile, USDJPY capped the day with a 55-pip dip at 84.05.

The better-than-expected S&P home prices data opened the US session, showing a 4.2% uptick when analysts only pegged the figure at 3.8%. The CB consumer confidence report also put a smile on the dollar bulls when it surprisingly rose to 53.5 from July’s 51.0 index figure.

Too bad the Chicago PMI data didn’t join in the party when it fell to 56.7 from July’s 62.3 optimistic figure. Of course, it also didn’t help that the FOMC meeting minutes reminded the markets of Fed Chairman Bernanke’s concerns last Friday. Like a broken disk, the Fed echoed that the labor market is still, weak, risks to economic recovery are larger, and that inflation is likely to remain restrained.

All right, enough of the snoozefest! Time for some action! The Challenger job cuts report at 11:30 am GMT might give a sneak peek of the big employment reports at the end of the week.

Not heavy enough for ya?

The ADP non-farm employment change data at 12:15 pm GMT ought to get your hearts racing since it is usually more correlated with the big NFP report. Market geeks expect an additional 20,000 jobs from July’s 42,000 increase, but a lower number just might energize the currency bears further.

The ISM Manufacturing PMI data at 2:00 pm GMT can also rock your charts as many traders are anticipating doom for the US manufacturing industry. Will it go higher than the expected 53.2 figure, or will it drop to a pessimistic figure below 50.0?

Lastly, the crude oil inventories report is scheduled to pop in at 2:30 pm GMT. The data might not get much attention after the release of the red-flag data, but a number lower than the expected 1.3 Million USD might influence the comdolls’ price action.

Don’t even think of missing all these reports! Happy trading!

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Will you look at that! The dollar finally decided to get with the program and responded like any other currency would to bad data. While it fared relatively well against the franc and yen, its performance against most of the other major currencies was simply disastrous. EURUSD found itself 131 pips higher at 1.2803 at the end of the day.

Yesterday’s headliner was the ADP non-farm employment change data, which didn’t let down dollar bears by printing worse than expected. Following the 37,000 increase seen in July, the number of employed people in August fell 10,000 instead of rising 20,000. But given the US’s recent string of disappointing data, did the worse-than-expected results really come as a surprise?

The US published a rare bit of positive news when it released its monthly ISM manufacturing PMI figures. The report gave August a reading of 56.3, shooting well over the anticipated 52.8 and the previous month’s reading of 55.5.

Markets found further reason to leave the safe-haven arms of the dollar thanks to improved risk appetite brought about by a rise in equities. Chinese manufacturing data also helped bolster confidence worldwide as improving conditions in China’s manufacturing sector helped calm fears of slower economic growth.

On the economic docket today is last week’s unemployment claims data. The report is slated to show that a total of 475,000 people filed for unemployment benefits, up by 2,000 the previous week. Catch the actual numbers at 12:30 pm GMT!

Just minutes after that at 1:00 pm GMT, Fed Chairman Bernanke gets onstage to testify on the causes of the recent economic crisis. Keep your eyes glued to the tube in case Bernanke drops hints about further quantitative easing or the Fed’s future moves.

Last but not least is the July pending home sales data. Analysts believe we’ll see a 1% downtick following the 2.6% uptick in June. Will worse-than-expected results spur a round of risk aversion? Find out at 2:00 pm GMT!

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The dollar was unable to find clear direction in the charts yesterday as it traded mixed against other major currencies. While it posted gains over the Loonie and the pound, the dollar lost versus the euro, the yen, and the Swissy.

Meh, who could blame the dollar? Data was all over the place! Even though the weekly initial jobless claims came in better than expected (472,000 actual vs. 475,000 consensus), the report on Factory orders only showed a 0.1% growth compared to the 0.2% initial forecast. On top of that, pending home sales apparently rose 5.2%, opposite the 1% fall predicted.

Today will a big one, not only for the dollar, but for other currencies as well. At 12:30 pm GMT, the US will release the highly anticipated NFP report. It is slated to show that 100,000 jobs were shed in August after already dropped 131,000 the month before. The job losses is expected to take the country’s unemployment rate to 9.6% from 9.5%.

I don’t know how exactly price action will play out upon the release, but Forex Gump does provide us with some insight. Go ahead and check it out in his blog!

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Did you catch the Greenback’s moves last Friday? As soon as the NFP report was released, Mr. Greenback hit the floor and started groovin’ to Flo Rida’s “Low.” Next thing you know, EURUSD was edging towards 1.2900 while AUDUSD peaked at .9176.

Even though the employment report showed that joblessness wasn’t as bad as expected, traders showed no love for the Greenback last Friday. The NFP report revealed that only 54,000 jobs were lost in August, better than the expected 101,000 decrease in hiring. Aside from that, the July figure enjoyed an upward revision from -131,000 to -54,000. Hooray for the US labor market! Still, the unemployment rate climbed a notch from 9.5% to 9.6% during the month, suggesting that it’s too early to chalk up a labor market recovery.

On top of that, the employment component of the ISM non-manufacturing PMI suggested that the labor market could still encounter a few roadblocks ahead. The index slid from 54.3 to 51.5 in August, signaling that the expansion in the services industry weakened last month. The employment component dipped 1.5 points below the 50.0 mark, reflecting a contraction in hiring in the services industry. Uh oh…

After all that excitement last week, trading is expected to be quiet today since most traders are off on a Labor Day holiday. On top of that, the economic schedule is free from top-tier reports this week. The only reports due from the US are the Fed’s Beige Book, trade balance, and the usual weekly jobless claims. Keep an eye out for those!

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With everyone out on holiday, it comes as no surprise that action on the charts yesterday was as “exciting” as a Tim Duncan dunk. In other words, it was a snoozer! Just like the San Antonio Spurs’ center, the mighty USD muscled through its opponents and managed to make modest gains against the yen, pound, and euro. In the end, EURUSD closed 18 pips lower for the day at 1.2875.

Traders from the US were busy partying their hearts out and making the most of their Labor Day weekend. That’s just how they roll!

Worry not because things will probably pick up today as traders return from vacation. Unfortunately, no US reports are scheduled for release today, so you’ll have to monitor risk sentiment to see where the USD is headed. If sentiment turns sour, people may just buy back the dollars they sold off last Friday.

Earlier this morning, we got our first signs of life from the markets. It was revealed that some of the major banks participated in the euro zone’s stress testing understated lenders’ holdings of risky government debt. EURUSD dropped massive pips as investors began to doubt the reliability of the stress tests. Hooray for the USD! Now, let’s see if this will dictate the pair’s for today!

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Up, up, and away! With risk aversion providing plenty of support, the USD sprung back to life yesterday. It bounced just like Happy Pip does when she’s on a sugar rush! The USD gained a total of 182 pips against the euro, while chalking up a 31-pip gain versus the pound for the day.

There were no hard-hitting reports from the US yesterday, so what’s the dilly, yo?! USD bulls can thank the euro zone stress tests for scaring investors into buying up safe haven currencies. Apparently, some of the major banks that participated in the stress tests understated their holdings of risky government debt. This got many wondering if the results of the tests are reliable at all!

Today, we’ll get a peek at the Fed’s Beige Book. This report is published eight times a year and summarizes information regarding current economic conditions in each of the 12 Federal Reserve banks’ districts. Though it’s second-tier data, it’s worth taking a look at because the FOMC studies it carefully when they make their interest rate decisions. Catch it at 6:00 pm GMT!