Daily Economic Commentary: United States

Trading Discussion News and Economy
326

I betcha the dollar didn’t wake up today feeling like Pip Diddy as risk appetite made the market tik tok yesterday. Ha! It lost 32 pips against the euro and 107 pips against the pound. USDJPY was able to close 14 pips higher at 83.91, but the pair first dipped to its new 15-year low at 83.34 during the European session. Ouch!

A probable reason why USDJPY was able to end the day with a gain was because consumer credit only declined by 3.6 billion USD in July and the market had been expecting a 4.2 billion USD decline. Yipee!

Another one could be because of the Federal Reserve who took the dollar’s center stage yesterday. It released its Beige Book report which concluded that the overall economic activity is cooling but not all states are experiencing a slowdown.

I guess you can say that the dollar’s hustle against the yen during the New York session was because traders were looking at the glass half full rather than half empty. Or then again, maybe they were just desperate for USDJPY to retrace before they start selling the pair again. Hmm…

Anyway, Minneapolis Fed President Narayan Kocherlakota also spoke about the economy. He said that he is concerned about the labor market and that he expects the unemployment rate to go beyond 8% in 2012. Uh oh, that can’t be good. I wonder if this will affect the dollar in today’s trading along with the economic reports we have on tap.

Later today at 12:30 pm GMT, we have trade balance data and it is expected that imports outpaced exports by 47 billion USD in July, which is better than the 49 billion USD deficit in June. Along with that we also have the unemployment claims report for last week. The number of people who filed for unemployment benefits is seen to have decreased by 2,000 to 470,000 from its previous reading.

There’s a chance that the trade balance report will be positive given the pick-up in manufacturing activity. However, if the unemployment report comes in worse than expected, we may just the dollar pare its gains against the yen. Good luck with your trades and may the pips be with ya!

327

After a hip eenie-meenie-miney moe number on the dollar, the bulls and bears decided to leave the currency virtually unchanged against its major counterparts yesterday. USDJPY capped the day only 8 pips lower than its open price at 83.83. Meanwhile, EURUSD called it quits at 1.2705 after tapping an intraday high of 1.2767.

The traders must have enjoyed the fancy beats of the US economic reports. Falling imports and rising exports narrowed the US trade deficit down to 42.8 billion USD. Now that’s definitely more awesome than June’s 48.9 billion USD figure! And to think that the analysts only pegged the figure at 47.4 billion USD. Tsk tsk.

The dollar bulls also got giddy when this week’s unemployment claims dropped to 451,000. Okay, so maybe nine states forgot to file their claims on a Labor Day holiday, but hey, a drop is a drop, right?

Aside from July’s wholesale inventories report at 2:00 pm GMT, no other major economic reports will be setting the tune for the dollar today. But keep your eyes open for any announcement or report that could shift the sentiment on the dollar! Those dollar bears just might strike when you least expect it…

328

Judging by the mixed results the USD got on the charts last Friday, it seems like investors couldn’t agree on a single verdict for the currency… Unlike the movie “The Last Airbender,” which I think we can all agree was a total flop! EURUSD was practically unchanged from its opening price of 1.2705, USDJPY rose 38 pips to 84.20, and GBPUSD dropped 19 pips to close at 1.5358.

We’re usually used to seeing the US dictate market movements for the other currencies, but we saw the tables turn last Friday. Instead, the USD found itself reacting to foreign developments. Perhaps that’s what caused the USD’s varied reviews.

Worry not, though! The US will be back in business this week with a truckload of reports to give you your US data fix!

The first high-impact report coming our way is the retail sales report, which is slated to show a 0.3% uptick in August following the 0.4% increase in July. Catch it tomorrow at 12:30 pm GMT!

The action picks up on Thursday when the US unloads four hard-hitting releases.

First off is the monthly PPI report which is due at 12:30 pm GMT. August is expected to post a 0.3% increase in producer prices after July recorded a 0.2% uptick.

At the same time, the weekly unemployment claims data will be available. Will we see an improvement from the previous week’s 451,000 claims? Better yet, let’s put analysts’ forecasting abilities to the test and see if they were right in saying 460,000 people filed for unemployment insurance last week.

Then at 1:00 pm GMT, the TIC long-term purchases figures is scheduled to be unveiled. The balance of domestic and foreign investment is expected to shrink from 44.4 billion USD to 37.9 billion USD in July. Investors usually react bearishly to low figures, so watch out for worse-than-expected results!

The last report due Thursday is the Philly Fed manufacturing index, which measures conditions in the manufacturing sector of Philadelphia, New Jersey, and Delaware. Last month posted an awful reading of -7.7, but this month, analysts say the reading will pick up to 0.5.

Friday gives us a couple of notable reports, too. For one, the CPI report is due at 12:30 pm GMT and is expected to show that prices increased by 0.3% August as it did in July.

Minutes after that, at 1:55 pm GMT, the University of Michigan’s consumer sentiment data will be available. After posting a 68.9 in August, the report is expected to print a reading of 70.3 in September.

As usual, keep your eyes peeled for better-than-expected figures than can help the USD combat its safe haven rivals! Stay safe, guys!

329

The dollar seemed more out of place in yesterday’s trading than Russell Brand was in hosting the VMAs. It lost against all of its major counterparts giving up the most against the euro with 144 pips and the Swissy with 124 pips. USDJPY also closed 66 pips lower at 83.66. Tsk, tsk.

  Risk appetite kept the dollar from gaining against its  higher-yielding counterparts, thanks to better-than-expected industrial  production figures from China. It was reported last Saturday that the  Asian superpower’s industrial sector expanded at an annual rate 13.9% in  August which overshot the market’s 13.1% forecast. There was also the  upbeat economic outlook of the European Commission which may have helped  ease concerns on Europe’s financial crisis.

  The sharp increase in US bond yields which tapped its one-month high  last week, might have been the dollar’s kryptonite against the yen.  How? Well, higher [bond](http://www.babypips.com/forexpedia/Bonds) yields usually make the yen more attractive than  the dollar to use as a funding currency. 

A handful of analysts are expecting that the dollar will be able to  post gains against its safe-haven counterparts today with the retail  sales report. Due at 12:30 pm GMT, the retail  sales figure for August is seen to come in at 0.3%. Core [retail sales](http://www.babypips.com/forexpedia/Retail_Sales),  which exclude automobile purchases by consumers, is seen to have  increased by 0.2% to 0.4% during the month. These giddy analysts are  expecting the actual figures to wow the market because they think that  discounts given by retailers were much higher in August than in July. I  think my buddy [Forex Gump](http://www.babypips.com/blogs/piponomics/) mentioned this in his [blog](http://www.babypips.com/blogs/piponomics/end_of_season_sale.html) yesterday. However,  if they’re wrong, the dollar could be in for more bear attacks. Yikes!

We also have the IBD consumer optimism index for September at 2:00 pm GMT.  It is eyed at 44.0 implying that the general sentiment of American  consumer is improving. Along with that, we also have the business  inventories report for July on tap. A figure lower than the 0.5%  consensus will probably be good for the dollar as this would indicate  future corporate spending as companies spend to stock up their  inventories.

Good luck and happy trading!

330

Despite the better-than-expected results on the US retail sales report, the Greenback still turned out to be the biggest loser in yesterday’s trading session. It lost a huge amount of pips against all major currencies (yes, even versus the yen and the franc). EURUSD found itself rallying above the 1.3000 handle, USDCHF dropped below parity, while USDJPY fell to new 15-year lows.

Apparently, the Greenback was broadly sold-off on the news that the Fed could announce its second round of quantitative easing as early as November. In addition, word on the grapevine is that China could let its currency appreciate against the Greenback at a wider band against the dollar to avoid US trade sanctions. Surprise, surprise!

For today, there are two important economic reports from the US that the market will focus on.

The first one, the Empire State Survey, will come out at 12:30 pm GMT. The survey is predicted to print a reading of 8 for this month, up the 7.1 reading seen the previous month. The second one is the industrial production report. Scheduled to come out at 1:15 pm GMT, industrial production is predicted to have climbed by 0.2% in August, slightly lower than the 1.0% rise in July. Given how weak the Greenback has been, we could see traders use the reports as a catalyst for another sell-off.

331

After its huge losses last Tuesday, the dollar decided to just chill within the ranges yesterday. Save against the yen, the dollar mostly moved sideways across the board, with EURUSD ending the US trading session barely changed at 1.3013 from its Asian session opening price of 1.3008. GBPUSD followed suit and closed a mere 60 pips higher from its opening price.

It looks like the weaker-than-expected data that were released yesterday tamed risk appetite.

The Empire State manufacturing survey for September came in below expectations at 4.1 (the forecast was a reading of 8). The reading was also significantly below August’s 7.1. Meanwhile, the report on industrial production showed a measly rise of 0.2% for August, a third of the 0.6% increase (revised down from 1.0%) seen in July.

Will we begin to see the dollar retrace some of its losses? Hah, be careful folks, bear mojo is still pretty strong, as they are just probably lurking on the sidelines waiting for some sort of catalyst to make their move! With the huge amount of economic reports scheduled to be released, the catalyst may come sooner than you think!

At 12:30 pm GMT, the economic calendar presents a buffet of news releases to choose from. There are producer price index (0.3% forecast, 0.2% previous), the weekly unemployment claims (463K forecast, 451,000 previous), and the current account balance (-124 billion USD deficit forecast, -109 billion deficit USD deficit previous).

Then, come 1:00 pm GMT, we will see the Treasury International Capital System Flows. The report measures the difference between foreign long-term securities purchased by US citizens and US long-term securities purchased by foreigners. It is predicted to show a surplus of 47.5 billion USD for July, up from the 44.4 billion USD surplus from the month before.

Lastly, at 2:00 pm GMT, the Philadelphia Fed Survey will come out. A reading of 0.3 is expected for this month, an improvement from the -7.7 figure seen in August.

So there ya have it folks! There are a number of data that could trigger another dollar sell-off, so be vigilant!

332

Boy did the Greenback bring sexy back against its low-yielding counterparts in yesterday’s trading! After USDJPY dipped to an intraday low of 85.23, the dollar put its muscle on a hustle and closed with a 9-pip gain at 85.83. Against the Swissy, it ripped a 122-pip win as the dollar bulls settled USDCHF at 1.0158 to end the day. Oh yeah!

Good thing yesterday’s roster of economic reports was awesome enough for investors to run after the dollar instead of the other safe-haven currencies. However, it wasn’t all good because EURUSD closed higher at 1.3078, giving the dollar a 67-pip loss.

Let’s take a look at what we had on tap yesterday, shall we?

The only piece of bad news that we got was the Philadelphia Fed Survey with its index for September printing a 0.7 decline and missing the 0.9 growth forecast. Yikes! I guess this means that manufacturers in Philly don’t see themselves smilin’ much at their business reports anytime soon, huh?

On the brighter side of things, the PPI report showed that inflation picked up in August. It came in at 0.4%, and beat both the 0.3% consensus and the 0.2% reading in July. Boo yeah! Then there was the unemployment claims figures for last week that printed at 450,000. It came as a pleasant surprise to the market as it had been bracing for an increase of 5,000 at 458,000 from its previous reading.

We also saw that the current account deficit grew 123.3 billion USD during the second quarter from a 109.2 billion USD shortfall in the first. But then again, it was still better than the market’s forecast which was a 125 billion USD deficit. So I guess that’s a good thing, right?

To put the cherry on top of the sundae that is the dollar’s list of good news was the TIC Long-Term Purchases report. It showed that foreigners bought the most dollar-denominated assets since September 2009, valuing at 61.2 billion USD in this July. That was stellar news considering that the market had only expected a modest increase at 47.5 billion USD to follow July’s 44.4 billion USD reading.

Oh yeah before I forget, Treasury Secretary Timothy Geithner also spoke yesterday. He said that he will get his homies in the G20 hood to convince China to strengthen the yuan. The US has been trying to do this for a while now because the weak yuan is taking a toll on the competitiveness of American workers. Let’s see if Geithner can finally pull this off in November when the G20 meets in Seoul.

Anyway, today we have the CPI figure for August which is seen to have remained flat at 0.3%. Given the uptick in PPI that we saw yesterday, there’s a good chance that we could be in for another pleasant surprise for the dollar. Boo yeah! We also have the University of Michigan Consumer Sentiment report at 1:55 pm GMT. Analysts are expecting to see some optimism in September with the forecast higher at 70.2 than August’s 68.9 reading.

Be sure to watch out for this reports later before you head out to the club! Have a great weekend ahead guys!

333

The dollar’s scorecard for Friday was as mixed as the reviews for the latest Universal Pictures flick, Devil. It was able to spook 41 pips from the euro as the bears hustled EURUSD from an intraday high of 1.3159 to its close at 1.3038. However, it was unable to nudge pips from the yen as USDJPY ended its 34-pip range 4 pips lower at 85.80. Against the Swissy, it took a 52-pip loss as USDCHF closed the week at 1.0098.

Perhaps it was risk aversion that convinced traders to give the dollar thumbs ups against its higher-yielding counterparts. On the other hand, I’m guessing it was the not-so-stellar economic reports that got it a Rotten Piptatoes review against its safe haven counterparts. Let’s take a look at them, shall we?

Last Friday we saw that the CPI for August came in as expected at 0.3%. The core CPI, which excludes volatile items such as food and energy, remained unchanged during the month but fell short of the 0.1% expectation of the market, following July’s 0.1% increase in July. This may have frustrated a few traders because the better-than-expected PPI figures released earlier last week might have gotten their hopes up.

Then, the shock to the heart of the dollar bulls came with the University of Michigan consumer sentiment report. The index for September printed at 66.6 following its 68.9 reading in August. Just how bad was this? Well, aside from missing the 70.0 consensus, it also translates to its lowest reading since August 2009! Yikes!

Today we only have the results of the NAHB Builders Survey at 2:00 pm GMT. Analysts are expecting an increase to 14.0 in September from August’s 13.0 reading. You may want to keep tabs on this report as it could set the tone for the string of housing reports we have for tomorrow.

Let’s see what we’re in for on Tuesday. Well, at 12:30 pm GMT we have the building permits figures for August which is seen to print at 56,000. Along with that, we also have the number of housing starts for the month which is forecasted at 55,000.

Then at 6:15 pm GMT, we have the FOMC interest rate decision. Yeah, it’s a no-brainer that the Fed Reserve will most probably not announce an interest hike but, we still have the accompanying statement to look forward to. If the market finds the Fed’s tone hawkish or even at least optimistic enough, then we may just see the dollar snatch a pip or two from its safe-haven counterparts. So make sure you don’t miss that!

334

Zzzzzzz… The dollar’s price action yesterday was as exciting as watching water boil when it only inched by a few pips against its major counterparts. A holiday in Japan closed USDJPY only 3 pips higher at 85.75, while EURUSD crawled by 9 pips at 1.3062.

Hmm, are the dollar bulls and bears gearing up for more action? Only the NAHB housing market index was released yesterday, and the data didn’t even move from its 18-month low of 13 due to the expiration of the tax credit.

The housing starts at 12:30 pm GMT might give us a clearer picture, but the data is also expected to remain at its 550,000 figure.

Another expected non-mover is the building permits report at 12:30pm GMT. The data also expected to retain its 560,000 number, and a bigger-than-expected number might put a smile on the building constructors’ faces.

Of course, even those red flags got nothing on the big FOMC decision today at 6:15 pm GMT! Aside from the Fed’s interest rate decision, market geeks are going to be all eyes and ears on the Fed’s plans for the economy. If the Fed expands their balance sheet enough to signal a QE round 2, then we might see the dollar bears party like there’s no tomorrow.

Watch your trades closely, kiddos!

335

The dollar stopped, dropped, and rolled down the charts as the Fed’s pessimism set it on fire. It lost against all of its major counterparts, with EURUSD reaching its one-month high at 1.3286 and the euro burning 173 pips to end the day. AUDUSD also tapped its 2-year high at 0.9565 while USDJPY closed lower at 85.10.

In a nutshell, the FOMC minutes revealed that the central bank is still pretty concerned about the recovery of the US economy. There wasn’t really anything in the statement that came off as a surprise to traders. However, the Fed’s remark about inflationary pressure barely being present and its willingness to “support” the economy, might have hinted that QE2 is on the way. Yikes!

Not even yesterday’s roster of better-than-expected housing reports extinguished the dollar’s bear fire. According to Census Bureau, the number of building permits increased by 56,900 in August which was slightly better than the 56,000 consensus. Housing starts also came in as a pleasant surprise by printing at 59,800 for the month, overshooting both the 55,000 forecast and its 54,000 reading in July.

With no high-caliber report on tap for today, I wonder if investors will continue dumping their dollars like hot potatoes. We only have the house price index for July at 2:00 pm GMT later. Analysts are expecting to see a softer decline by 0.2% during the month after it fell by 0.3% in June. A better-than-expected figure may be bullish for the dollar as it would support yesterday’s data in implying that the housing market may already be revving up. I’m not sure though, if it will be enough to counter the Fed’s pessimism.

Oh! Make sure you also tune in to the result of Portugal’s bond auction as it may cause a shift in market sentiment. Good luck!

336

Did the Greenback bring sexy back yet? Ummm… no. It lost to all of its major counterparts save for the Loonie during yesterday’s trading. It gave up 157 pips to the euro as EURUSD closed the day at 1.3392 after hitting a 5-month high at 1.3442. USDJPY stayed below the 85.00 handle all throughout the day, ending at 84.55.

Without any high-caliber economic hollers yesterday, traders had nothing to sink their teeth into other than the dovish FOMC minutes we heard a couple of days ago. Tsk, tsk. Making things worse was the HPI for July which showed that house prices decline by 0.5%, and disappointed the market’s -0.2% consensus. Ouch!

Today we have a few reports on tap for the dollar. However, I don’t think that better-than-expected figures will be enough to counter the negative vibes sparked by the possibility of the US getting another dose of QE. That’s just me though.

At 12:30 pm GMT we have the number of unemployment claims for last week which is seen to come in at 450,000. Then at 2:00 pm GMT, we have the existing home sales and leading index reports for August.

Analysts are expecting to see an increase to 4.1 million in the number of existing homes sold during the month, following July’s 3.83 million reading. On the other hand, the Conference Board is anticipated to report a 0.1% increase in its index which is only equal to its reading in July.

Take note that the BOJ may step in to intervene again with USDJPY is nearing the 84.00 handle. Yikes! Be on your toes and be ready to catch ‘em pips!

337

“A little bit of this, a little bit of that…it’s all in the game of love…” The currency bulls and bears did a Michelle Branch number yesterday as the mixed news from the US inspired a dizzying game of love for the dollar. EURUSD plunged by 74 pips to its 1.3318 closing price, but USDJPY dipped to a 84.33 close after reaching an intraday high of 84.68.

The unemployment claims report factored into the mix yesterday when last week’s jobless claims unexpectedly increased by 12,000 to 465,000. Continuing claims, too, rose to 4.537 million from 4.489 million. Uh-oh, will the Fed have to act sooner than they expected?

Good thing the existing home sales report cooled the heat a bit when it clocked in at 4.13 million USD. This was an improvement from July’s 3.84 million and the expected 4.11 million figures, which suggested that the housing market might not be as shaky as the Fed estimated. Whew!

Can the economic reports today fuel the delicate optimism? The core durable goods orders will start the day at 12:30 pm GMT, and the new home sales report will follow at 2:00 pm GMT. Both reports are expected to beat their July figures, but weaker-than-expected numbers might inspire the dollar bulls to ditch the dollar.

Last to hit the stage is US Fed Chairman Ben Bernanke when he gives his speech in Princeton at 8:30 pm GMT. Will we hear more about additional quantitative easing measures? Keep your eyes glued to the tube!

338

Good day and a happy Monday to you! Last Friday, the dollar was seen in the corner bruised and crying again when it received another round of beating from other major currencies. The US dollar index closed the week at 79.75, its lowest level since early February.

What brought about the dollar’s fall this time?

Apparently, better-than-expected data triggered another wave of risk appetite in the markets, which caused equity markets to soar and the dollar to tank. The German IFO business climate survey from the euro zone showed some strength when it printed a reading of 109.7 versus the 108.7 consensus. Meanwhile, the core durable goods orders for August came out with a strong 2% gain, which is higher than the 1% increase initially expected and an improvement from the previous month’s 2.8% decline.

In addition, the Fed’s promise to stimulate growth and the economy through the printing of new money easing also weighed heavily on the dollar.

No data on the calendar today, but do expect two major reports as the week goes by.

The first one is the US’s third installment of its GDP report. Scheduled to print at 12:30 pm GMT on Thursday, the GDP report is predicted to show that the US economy grew by 1.6%. The second one is the ISM manufacturing survey. It is due for release on Friday and it is expected to print a reading of 54.5 for September, slightly lower than the 56.3 reading seen in August.

Judging from how traders reacted to data last week, the dollar could find itself crying in the corner again if the actual numbers were to come in better than forecast…

339

The absence of any economic data from the US kept the Greenback mostly stuck in range across the charts yesterday. EURUSD, for instance, simply paced back and forth between support at 1.3425 and resistance at the 1.3500 handle.

Looking at economic calendar, it looks like the dollar could find some direction once the S&P Case-Shiller home price index (9:00 pm GMT) and the CB consumer confidence survey (10:00 pm GMT) come out.

The S&P HPI is expected to show that the selling price of homes rose by 3.1% in July, slightly lower than the 4.2% increase in June. Rising house prices is typically considered good for the economy because it attracts businessmen to invest in the housing industry.

Meanwhile, the CB consumer confidence survey is slated to print a reading of 52.3 for September, a point lower than the figure seen last month. This survey measures how consumer feels about their finances, so a falling reading usually translates to lower consumer spending. Who wants to spend when he doesn’t feel confident about their financial standing, right?

That’s about it for today folks. Keep a close eye on the results of the upcoming reports, because if the actual figures do not come as expected, we could see the Greenback bust out of its range! Good luck!

340

Does the dollar love Ester Dean’s tune or what? It kept on droppin’ it low against its major counterparts yesterday, with EURUSD soaring to 1.3579 after it had dipped to an intraday low of 1.3381. Meanwhile, USDJPY had dropped to near the pre-BOJ intervention levels at 83.69 before it leveled off to close at 83.95.

With the parade of bad economic data from the US yesterday, can you really blame the dollar bears for partying? The S&P Case-Shiller house prices report printed a 3.2%, which was a letdown from last June’s 4.2% growth. I guess the Americans couldn’t get over the expiration of the tax credit, huh?

The procession of red numbers was followed by the drop in the CB consumer confidence from 53.2 last August to an index figure of 48.5 in September. Lastly, the Richmond manufacturing report also lost some love when it printed a crushing -2 from last August’s 11 index number.

Will the dollar get some relief today? Only the crude oil inventories is slated for a spotlight today at 2:30 pm GMT, followed by FOMCmember Eric Rosengren’s speech in New York at 5:15 pm GMT. Be on your tippy-toes for any hints at QE round 2!

341

To QE or not to QE? That is the question that has been bugging the members of the Fed as they attempt to address the US economy’s sluggish growth. Despite the lack of major reports from the US, the dollar continued to fall against its major counterparts. EURUSD, for one, climbed by 51 pips to a closing price of 1.3629 while USDJPY dropped by 30 pips to end the day at 83.66.

Since traders prefer more excitement than watching US Fed members like Philadelphia Fed President Charles Plosser and Boston Fed President Eric Rosengren lock horns over the need for a quantitative easing, they turn their attention to the other currencies like the euro and the Aussie. Awww…

Maybe the dollar can gain back its spotlight when the unemployment claims is released today at 12:30 pm GMT. The figure is pegged at 458,000, but a lower number just might get the attention of the dollar bulls.

The Chicago PMI report at 12:30 pm GMT is also expected to decrease to 56.0 from last August’s 56.7 index figure, while the final GDP report at the same time is expected to remain at 1.6%.

Lastly, US Fed Chairman Ben Bernanke will star the show when he testifies before a Senate Committee in DC at 2:00 pm GMT, followed by an encore at 6:30 pm GMT in a town hall meeting also in DC. Hmm, it sure looks like he has a lot to say! Will we hear clues on the big QE? Best keep your eyes glued to the tube for these reports!

342

It’s been a while since we saw signs of life from the USD. Yesterday, it clawed its way through the charts to salvage a few wins. While it sold off against the JPY and CAD, it salvaged a few victories versus the AUD, NZD, GBP, and CHF. Versus the EUR, it was practically held to a stalemate as EURUSD rose just 5 pips to close at 1.3634.

Finally, a chance for USD bulls to get in on the action! The USD got quite a boost when the US started releasing its economic reports.

The unemployment claims data set the tone for the rest of the NY session when it came in at 453,000 to beat forecasts for 460,000. Who wouldn’t celebrate after seeing that the number of individuals claiming unemployment benefits dropped from 469,000 the previous week?

Then the final quarterly GDP figures added to the USD buying frenzy when it printed a growth of 1.7% for Q2 2010 to exceed expectations by 0.1%.

The manufacturing industry of Chicago added to the good news when the Chicago PMI report published a reading of 60.4 for the month of September. Traders went even more gaga for the USD after seeing this figure because most analysts were only expecting to see a 55.5 after last month recorded a 56.7. But some say the report was actually bittersweet since the increase in production was met by a decline in employment and prices paid to manufacturers.

Though yesterday’s results were positive as a whole, market geeks say the dollar’s rebound is temporary and will be short-lived. According to them, the Fed is still likely to continue further easing in November, though probably to a lesser degree.

The action never stops in the US! They’re gearing up to publish a few more possible market movers today.

At 12:30 pm GMT, the core PCE price index for August is expected to mirror the previous month’s 0.1% change in prices. Likewise, the personal spending report is anticipated to show a 0.4% uptick in August, just as it did in July.

Then at 1:55 pm GMT, the revised University of Michigan consumer sentiment report will come out. Will we see a rise from 66.6 to 67 as analysts say we will?

Last but not least, the ISM manufacturing PMI will be available at 2:00 pm GMT. Don’t be surprised to see the reading fall from 56.3 to 54.5 since most analysts predicted a drop!

Phew! As always, be on the lookout for any upside surprises that may boost the USD. With so many big reports, we could be in for some wild swings. Be careful out there, guys!

343

Geronimooo!! It seemed that the dollar couldn’t get enough of its slide down the charts last Friday when it ended the week further down in the pip dumps against its major counterparts. USDJPY, for one, leveled off to a 17-pip loss at 83.31 after hitting an intraday low of 83.16. Meanwhile, EURUSD soared by 147 pips at 1.3780.

Where did all he love go? Certainly not in the Fed members squabbling on whether or not another round of QE is needed! Although the numbers on the affirmative side of the debate have grown, traders think that the Fed members will wait for the big NFP report this Friday before making the big decision.

Speaking of reports, the data released last Friday provided little relief for the dollar bulls. The core CPI and personal spending stagnated at 0.1% and 0.4% in August, while personal income inched up to 0.5% from July’s 0.2%. Meanwhile, the ISM manufacturing PMI dropped to 54.4 after clocking in at 56.3 last August.

Uh-oh, let’s hope the red flags this week can make up for all the love lost! The US will kick off the week with the pending home sales report and the factory orders report at 2:00 pm GMT. Both reports have weaker expectations, so worse-than-expected numbers might provide the caffeine-like boost for the dollar bears.

US Fed Chairman Ben Bernanke will also hit the spotlight twice today when he gives two speeches at 7:00 pm GMT and 11:30 pm GMT in a convention center in Providence. Will he say “We will not be launching another QE” in his first speech and “I’m kidding” In his second? Let’s hope not!

Other red flags parading around this week include the ISM non-manufacturing PMI tomorrow at 2:00 pm GMT, ADP non-farm employment report on Wednesday at 12:15 pm GMT, unemployment claims report on Thursday at 12:30 pm GMT, and the big NFP report this Friday at 12:30 pm GMT.

Watch your charts closely, kiddos!

344

“[I]Ready your pip-breakfast and eat hearty. For tonight, the bulls will sell! HA-OOH! HA-OOH[/I]!” The dollar bulls and bears did their own version of the Spartan soldiers yesterday when they pushed the dollar higher against its major counterparts in preparation for the big reports coming to the markets this week.

USD/JPY ended the day 14 pips higher at 83.42 after hitting an intraday high of 83.87. Meanwhile, EUR/USD suffered a 108-pip drop and closed at 1.3688.

Of course, the profit-taking-like action was also boosted by the better-than-expected data released yesterday. Pending home sales, for one, rose by 4.3% in August. This was the second monthly increase after the expiration of the home buyer tax credit, and signaled that the housing market is on its way to stability.

Meanwhile, the report on orders to factories also gave the dollar bulls a reason to cheer when orders for non-military capital goods climbed by 5.1% in August. This not only exceeded its previous 4.1% figure, but represented the biggest gain since March. Awesome!

Will the US follow through with its string of good reports, or was yesterday’s rally just profit-taking? The ISM non-manufacturing report will be released at 2:00 pm GMT, and a number higher than the previous 51.5 index figure could mean that more purchasing managers in the non-manufacturing industry are feeling giddy on the US economy.

Watch your trades closely!

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What a rut the USD is in! After recording a small bounce on Monday, it reverted back to its old ways and recorded losses against its major counterparts. EUR/USD forged a new six-month high as it rose 147 pips to end at 1.3836. Its performance against the yen was just as lame as USD/JPY fell to 83.21 from 83.43.

The USD is having a hard time finding buyers as talks of a second round of quantitative easing are still very fresh in investors’ memories. Will the Fed follow the footsteps of the BOJ? Investors felt the US may be more inclined to take further easing after the BOJ announced a rate cut and plans to put up a new asset-buying fund.

Investors didn’t seem to pay attention to the ISM non-manufacturing PMI figures. Results for the month of September failed to provide support for the USD even as it came in at a reading of 53.2, up from 51.5. Supplier deliveries, new orders, and imports were responsible for driving last month’s record past forecasts for a reading of 52. Many believe these numbers will translate to positive employment figures.

Let’s see if they’re right when the ADP employment survey is unveiled later today. According to analysts, we’re likely to see an increase of 20,000 in the number of employed people for the month of September after August posted a 10,000 decline. This report is usually treated as a preview to Friday’s NFP report, so don’t miss out. Catch it at 12:15 pm GMT!

Soon after that, at 1:00 pm GMT, Treasury Secretary Geithner steals the spotlight when he talks about the path to global recovery. You’d best be all eyes and ears when he speaks. He’s responsible for communicating Obama’s policies and may give us clues about and policy shifts the government may have in mind.