Daily Economic Commentary: United States

Trading Discussion News and Economy
366

Oomph! The dollar took a few hits from its major counterparts yesterday despite the absence of economic reports in the U.S. Except for USD/JPY’s 12-pip gain at 80.63, the cheddar lost 141 pips to the euro at 1.4034 and 122 pips to the franc at .9796.

Hmm, was it because traders were buckling up ahead of today’s major economic news? Aside from the big Congressional elections yesterday, the U.S.Fed members also began their 2-day meeting over the much-awaited quantitative easing program.

Employment reports will also join the parade of big news today, starting with the Challenger job cuts report at 11:30 pm GMT, followed by the ADP non-farm employment report at 12:15 pm GMT. The ADP report is expected to show an increase of 21,000 workers after dropping by 39,000 last September.

The ISM non-manufacturing PMIat 2:00 pm GMT might also rock the charts, especially if it prints higher than the expected 53.5 index figure for October. Next, the monthly factory orders at 2:00 pm GMT will be released, and a number higher than the estimated 1.6% gain might be able to bring some pip-lovin’ back to the scrilla.

But of course, all the spotlights are turned to the Fed members today as they release their FOMC statement at 6:15 pm GMT. Market junkies have been placing their bets on the size of the Fed’s quantitative easing program, and word on the forex streets is that the dollar will be attracting them currency bears if the Fed buys more than 500 billion USD worth of assets.

Stick around for these game-changers!

367

Thar she blows! After having investors on the edges of their seats for weeks, the FOMC finally made its big statement and detailed its plans for its second round of quantitative easing. All of the major currency pairs rose sharply after the announcement was made, with the Greenback losing to all of its counterparts except for the yen. EUR/USD ended the day over 100 pips higher at 1.4139, while the Greenback salvaged a victory against the yen as it closed at 81.07 with a 44 pip gain.

The announcement that the Fed will be buying up to an additional 600 billion USD of government bonds did not sit well with investors. Though this figure is only slightly above the 500 billion USD package most were expecting to see, it was enough to bring on another round of dollar selling.

Remember, the central bank’s interest rates are already at very low levels, as they decided to keep it at around 0.25%. To lower borrowing costs even further, it has resorted to buying government bonds in hopes of encouraging consumers to borrow and spend.

Many say this QE is conducive to carry trades. The U.S.’s low interest rates and the Greenback’s weakness make it a good funding currency, while “riskier” currencies offer higher yields and potential appreciation.

In other news, yesterday’s economic reports were surprisingly positive.

The ADP employment survey, which is often used as a preview of the NFP report, exceeded expectations of an increase of 20,000 when it printed a rise of 43,000 in employment. Following a couple of disappointing monthly declines, including a 2,000 drop in September, the results from October are a breath of fresh air. Who knows, maybe this Friday’s NFP data will follow suit and print better than expected.

Likewise, the ISM non-manufacturing report provided fundamental support for the Greenback. It printed a rise from 53.2 to 54.3 in October, 0.8 higher than expected. The service sector has been picking up quite well as it completed its 10th straight month of expansion. The question now is, did this growth translate to more jobs?

We’ll find out soon enough! At 12:30 pm GMT today, we take a look at the initial claims report, which many expect to show a total of 442,000 filings for unemployment benefits for last week. If results come better than expected and below the previous week’s 434,000 figure, we might just see the Greenback recover some of its losses.

368

KABOOM! The markets skittered away from the dollar yesterday after the U.S. Fed dropped the 600 billion USD bomb in the Fed’s FOMC statement. EUR/USD tipped an intraday high of 1.4283 before ending the day at 1.4204, while USD/JPY plunged by 34 pips to 80.74.

As Forex Gump mentioned in his blog, the Fed cited weak employment and inflation figures as some of the reasons why it decided to keep interest rates at 0.25% and add an additional 600 billion USD worth of asset purchases to stimulate the economy. Since the Fed was buying the low-yielding assets, markets were motivated to turn to riskier assets like the dollar counterparts.

Of course, it also didn’t help that the initial jobless claims rose by 20,000. The data printed at 457,000, and canceled out the 21,000 drop from the previous week.

Meanwhile, labor productivity rose by 1.9% after falling by 1.8% in the second quarter, while labor costs sank by 0.1% in the third quarter. Hmm, am I seeing a pattern here? It certainly looks like employers are getting more for their money, eh? No wonder the Fed is willing to burn a huge hole in its pockets!

Today will be another big day for the U.S. employment figures as the big non-farm employment report will be released at 12:30 pm GMT. Market geeks are seeing a 60,000 increase in September after its 95,000 drop in August, but keep an eye out for any surprises! The NFP report can induce massive volatility in the pip charts upon its release!

Around the same time the U.S. unemployment rate will also be released. The figure is expected to clock in at 9.6%, but any downside surprise can also inspire the currency bears to join the NFP action.

Another big economic report for today will be the pending home salesreport at 2:00 pm GMT. Remember that the Fed also wanted to boost housing figures with its additional purchases, so a number lower than the expected 3.0% rise could inspire another round of dollar-selling.

The last hoopla will belong to the FOMC members as Kansas Fed President Thomas Hoenig gives his speech at 1:30 pm GMT, followed by none other than Big Ben Bernanke himself at 6:00 pm GMT. Recall that Hoenig is the only person who voted against the QE, so we may expect some friction at their possibly conflicting statements.

Stick around for all the drama!

370

Is it just me or was the dollar the king of the hill last Friday? The greenback was able to shape up against its major counterparts last Friday after the non-farm employment report blew the market estimates out of the field. EUR/USD plunged by 173 pips to 1.4033; USD/JPY rocketed by 52 pips at 81.26; and Cable dropped by 83 pips at 1.6185. Talk about coming back with a vengeance!

Though the unemployment rate remained stubbornly high at 9.6% in October, the NFP report printed a staggering 151,000 job increase, with private sector popping up an additional 159,000 jobs. The figures not only doubled market expectations, it also represented the first monthly gain since April 2010. No wonder traders couldn’t wait to get a piece of the dollar-buying action!

Meanwhile, the pending home sales report surprisingly slipped in September, and clocked in a 1.8% decrease from last September’s 4.4% rise. This highlighted the weakness of the U.S. housing market despite the promising employment figures, and probably dampened the dollar bulls’ party.

Will the dollar stage more wins this week? No major economic data will be released in the US today, but FOMC members are stepping up to the spotlight. FOMC member James Bullard will say his piece at in New York at 4:30 pm GMT, while FOMC member Kevin Warsh will also hit a meeting in New York at 8:30 pm GMT. Will they have something to say about the Fed’s latest QE move?

We’ll have our next round of excitement on Wednesday when the trade balance report is released at 1:30 pm GMT, followed by the weekly jobless claims report at the same time. The trade deficit is estimated to narrow down to 44 .9 billion USD from August’s 46.3 billion USD figure, while market geeks peg the initial claims report at 451,000.

Why the initial jobless claims on a Wednesday, you ask? It’s because Thursday is a banking holiday as the country observes Veterans Day! Keep close tabs on your screens though, because the big G20 meeting in Seoul will also start on Thursday.

The market action will return on Friday at 2:55 pm GMT when the University of Michigan consumer sentiment report is released. The number is seen at 69.2, from October’s 67.7 figure, but any upside surprise can make the dollar bulls party in the pip streets.

Good luck in your trades this week kiddos!

371

The USD’s gaining ground? What’s up with that?! The USD picked up where it left off last Friday, climbing up the charts and avenging its recent losses to its major counterparts. Despite the lack of tier 1 reports, EUR/USD dropped 117 pips and closed at 1.3920 while GBP/USD fell 58 pips to finish at 1.6131.

One possible explanation for the USD’s rally is profit-taking. Last week’s non-farm payrolls data was still fresh on everyone’s minds and probably kept investors from taking the USD lower.

Also, recent developments in the euro zone have brought back risk aversion. Ireland is now in the spotlight as many are concerned over its sluggish growth and large budget deficit. Now investors are worried Ireland may default from its debt! Who do you think benefits from such risk aversion? That’s right, the USD!

In other news, the Fed’s plans might not be as carved in stone as others had previously thought. According to Fed Reserve Governor Warsh, the central bank isn’t unconditionally committed to its plans. In other words, there’s still a chance that the Fed may make changes. In fact, Warsh even said that the asset purchases may not even work! Is the central bank on the back foot already??

We’ve got another light day on our hands as the U.S. isn’t scheduled to publish any hard-hitting reports. In the meantime, be sure to whip out you risk sentiment thermometers because another round of risk aversion may help the USD’s recovery. Good luck out there, folks!

372

The Greenback was off to a weak start yesterday as it lost ground to some of its major counterparts. But before the day came to a close, the Greenback stepped on the gas and pulled off to a strong finish. The U.S. didn’t release any top-tier reports yesterday, which means that the Greenback’s rally was mostly a result of risk aversion.

The economic deck was filled with red marks yesterday, as most major economies released worse than expected data. Because of that, traders chose to dump the higher-yielding riskier assets in exchange for the safe-havens.

Will this behavior continue today? Let’s take a look at the upcoming data to find out!

The U.S. trade balance is on tap today, with the deficit expected to have narrowed from 46.3 billion USD to 45.0 billion USD in September. This means that exports probably stepped up their game during the month, and this translates to stronger demand for the U.S. dollar.

Also due today is the unemployment claims report, which could show that 451,000 people filed for jobless claims for the first-time last week. Even though this would be slightly less than the previous 457,000 figure, it would still reflect an increase in unemployment, which is negative for the U.S. economy and U.S. dollar. Stay tuned for the actual figure due 1:30 pm GMT.

Lastly, keep your eyes and ears open for any other news reports that could cause a shift in market sentiment. Note that some debt-ridden European countries are set to hold bond auctions today and if those bond sales go worse than expected, risk aversion could persist. Stay on your toes people!

373

It looked like the dollar was going to continue its bullish run, but by the time the London session came to a close, it gave back all its gains! Com-dolls like the AUD, CAD, and NZD all finished higher against the Greenback, as did the pound. Meanwhile, EUR/USD finished the day at its opening price at 1.3779 after trading as low as 1.3671.

The dollar remained steady early in the U.S. session, as economic data came in better than anticipated. The labor market got another thing to “cheer” about as unemployment claims came in at 435,000, better than the expected 450,000 figure. This marked the lowest level since July this year. But the bigger news was that continuing claims has also fallen to levels not seen in two years!

Is this good news? Hmmm… I can’t help but feel a little sceptical about it. Yes, it is nice to see continuing claims fall, but remember, one potential reason why claims fell is because for a lot of people who were receiving unemployment benefits, their benefits expired! Take note, a person can only collect benefits for 99 weeks… which is almost equal to two years.

So, it wouldn’t surprise me to see claims continue to fall, but before I jump on the celebratory bandwagon, I want to see the real cause for the fall in unemployment claims.

Meanwhile, the trade deficit shrunk from 46.5 billion USD to 44.0 billion USD this past September. This beat expert’s forecasts of a 45.0 billion USD figure. This also happened to mark the smallest the deficit has been in two years. The cause of this? You got it – rising exports!

Apparently, the weakening dollar has been helping U.S. manufacturers, as exports were up 0.3% during the month. How ironic – the U.S. has been calling out China as being currency manipulators and trying to gain an unfair export advantage… and now the U.S. is gaining because of a weak currency!

I suspect that this topic might just be brought up during the G20 meeting later this week…

Nothing on deck today, as it’s Veteran’s day in the U.S. Still, the markets will be open, so don’t expect liquidity to die down too much!

374

There’s just no stopping the dollar’s bull run! While American traders were chilling on the sidelines in celebration of Veterans Day, the dollar was busy hustlin’ to gain some pips. Once again, it easily imposed its will against its counterparts, sending EUR/USD 120 pips lower to 1.3659 and USD/JPY 18 pips higher to 82.50.

Momentum seems to have taken control of the markets as bulls continued to buy up the dollar in spite of the lack of reports. By the looks of it, risk aversion has come into play again. Equities and commodities took a dip as investors are growing more and more concerned over Ireland’s debt problems. Things are getting so bad that many are starting to believe that Ireland won’t be able to reign in its enormous debt and that they’ll need a bailout soon.

This, of course, has worked to the benefit of the dollar, which is a popular choice in times of risk aversion. And let’s not forget, the U.S. is coming off a string of positive economic data, adding further appeal to the dollar.

Today, Americans return from vacation and release the preliminary University of Michigan consumer sentiment report at 2:55 pm GMT. Viewed by many as a hard-hitting report, this release has the potential to rock markets as it measures consumer confidence. Confidence, as you know, is a good gauge of people’s willingness to spend.

The number to watch for this report is 69, as it is what analysts predicted to follow up last month’s reading of 67.7. Seeing how the dollar has been rallying in response to positive data lately, I’m inclined to think that better-than-expected results in this report will boost the dollar, too.

Also, a couple of FOMC members are due to speak today. Daniel Tarullo is scheduled to talk about “Next Steps in Financial Regulatory Reform” at 1:35 pm GMT while Sarah Raskin is supposed to deliver a speech on “Mortgage Servicing Issues” at 9:35 pm GMT. Since these two have a hand in determining future policy moves for the U.S., you ought to pay attention to what they have to say.

375

Dollar bulls took a breather from their rally last Friday as investors finally decided to end the dollar’s long winning streak. Though economic data was on its side, it couldn’t help but slide against its major counterparts. EUR/USD managed to close 34 pips higher at 1.3693 while USD/JPY hit a low of 81.65 before finishing just 6 pips lower for the day at 82.44.

It appears as though things are finally looking up for American consumers. According to the latest University of Michigan consumer sentiment report, sentiment improved for the second month in a row. November earned a reading of 69.3 on the index to follow up the previous month’s reading of 67.7 and exceed forecasts for a 69. Many are attributing the good vibes to the increase in incomes and employment.

In other news, the G20 meetings not so surprisingly turned out to be a real snoozer. Just as they did before, world leaders failed to come to an agreement regarding currency policies over the weekend. But this doesn’t mean nothing was resolved. They did promise to come up with guidelines to determine currency and trade imbalances in the future. Even though it’s a small one, this is a good first step towards achieving balance in world trade and the currency markets.

This week, all eyes will be on the retail sales report scheduled to come out later at 1:30 pm GMT. It’s interesting to see if the recent improvement in the labor market and rise in consumer confidence will translate to strong sales growth. After posting a 0.6% uptick in September, forecasts have October recording a 0.7% growth. Should this hard-hitting release come in better than expected, it would probably cause the dollar to get back on the winning side.

Tuesday follows up with the PPI report at 1:30 pm GMT. Producers’ goods and services are expected to show a 0.8% rise in October, double that of the previous month.

On the other hand, the TIC long-term purchases report is predicted to print a drop from 128.7 billion USD to 100.3 billion USD in October.

After that, at 2:15 pm GMT, the industrial production will be available. A stronger growth of 0.3% for the month of October is anticipated, following the 0.2% decline in September.

On Wednesday, we take a look at building permits data, which is expected to print a rise from 0.54 million to 0.57 million. Likewise, the CPI report is due and is slated to show a 0.3% increase in prices after September’s 0.1% uptick. Catch both reports at 1:30 pm GMT.

Then on Thursday, the weekly unemployment claims data will be released at 1:30 pm GMT. This time around, analysts say we’ll see an increase in the number of initial claims, from 435,000 to 438,000. Come 3:00 pm GMT, the Philly Fed manufacturing index will be out. Expect to see a sharp increase in the survey, from a reading of 1 last month to a reading of 5 in November.

We cap the week off with the main man himself, Fed Chairman Ben Bernanke, who is due to speak about “Approaches to Monetary Policy Revisited - Lessons from the Crisis” on Friday at 9:15 am GMT. Since many investors look to Bernanke for clues about future policy moves, you should listen in closely to what he has to say.

That’s it for this week, folks! Now go out there and make some pips!

377

Despite mixed economic reports, the dollar was still able to strut its stuff on the charts and get traders noddin’ their heads like yeah! EUR/USD ended the day 136 pips lower at 1.3568 and so did GBP/USD by 74 pips at 1.6045. On top of that, USD/JPY closed at its 6-week high at 83.19. Up top yo!

Yesterday, American consumers took the markets by surprise when the retail sales report for October showed that spending was double that of the previous month at 1.2%, and overshot the measly 0.7% forecast.

The stellar figure has already gotten a lot of market participants giddy for a good holiday shopping season along with the business inventories report. According to the Census Bureau, companies stocked up their shelves by 0.9% in September and beat the consensus by 0.1%. Some economic gurus think that this could be taken as an indication that businesses are anticipating consumers to continue their shopaholic ways in the months ahead.

It wasn’t all sugar, spice, and everything nice though. While the retail sales posted its biggest gain in 7 months, the Empire State Manufacturing Index printed its first decline in more than a year and tapped its lowest reading since April 2009 at -11.1. Analysts had only braced for a modest decrease to 14.0 in November following its previous reading of 15.7. Ouch!

See if the dollar will be able to hold on to its gains with the roster of economic reports we have on tap today.

We start things off at 1:30 pm GMT with the PPI report for October. The market is eyeing a 0.7% increase in producer prices during the month. However, word on the street is that we could be in for a pleasant surprise as a weak dollar coupled with strong commodity prices might have pushed inflation higher.

Then we have the Treasury International Capital flow report at 2:00 pm GMT. A reading higher than the projected 100.3 billion USD will probably be bullish for the currency as it would imply strong foreign demand for U.S. dollars.

We’ll end the day with the industrial production report at 2:15 pm GMT which is expected to show that industrial activity increased by 0.3% in October.

Be sure you don’t miss these figures later, aight? Remember to also keep an ear out for talks about the Fed pulling away from QE2 because from what I’ve heard, this might have helped the dollar rally yesterday.

Peace out y’all!

378

All hail the Greenback! Once again, it reigned supreme on the charts as the prevailing theme of risk aversion pushed investors towards the safe haven currency. It strengthened against ALL of its major counterparts, sending EUR/USD down 70 pips to 1.3489 and GBP/USD plummeting 159 pips to 1.5887.

Concerns over the possibility of an Ireland bailout continue to haunt investors. But the euro zone isn’t the only source of worries. South Korea decided to raise interest rates, and this spurred fears that China may follow suit to combat inflation. The problem with this is that a rate hike in China could cause an economic slowdown not only domestically but on the global front as well.

Investors didn’t seem to pay much mind to the negative reports printed yesterday. First, the PPI report printed a worse-than-expected increase of 0.4% in the prices of producers’ goods and services. Though this figure matches that of the previous month, it is only half what was forecasted. And if you exclude food and energy, this would translate to a 0.6% decrease, the first decline in a year.

In other news, the TIC long-term purchases report reported weaker demand for U.S. assets as net buying of long-term equities, notes and bonds narrowed from 128.7 billion USD to 81.0 billion USD in September.

Though the U.S. is still appealing to investors, this figure means that global demand for U.S. stocks, bonds, and other financial assets dropped in September, probably in anticipation of the Fed’s quantitative easing program.

Last but not least, industrial production remained stagnant in October after posting a 0.2% decline in September. Falling short of the expected 0.3% uptick, the latest results, in a way, justifies the Fed’s decision to take on further quantitative easing.

More reports coming your way today.

Building permits data for the month of October are slated to show a slight rise in the annualized number of new residential building permits issued from 540,000 to 570,000. On the other hand, housing starts are expected to decline from 610,000 to 600,000.

Also on deck is the CPI report, which is expected to triple the previous month’s 0.1% increase in prices. Will CPI follow in the footsteps of the PPI report and print lower than expected? Or are we in for an upside surprise?

Catch all these reports at 1:30 pm GMT!

379

How kind of you to give back some of your recent gains, Mr. Greenback! After days of seeming invincible, it finally showed a chink in its armor as disappointing U.S. data caused it to stop its rally. At the end of the day, EUR/USD finished at 1.3514 after slowly crawling 25 pips higher.

Remember how I said that we could be in for a few surprises? Well, we got surprising results alright… But all to the downside!

The building permits and housing starts reports both printed red figures for the housing market, falling short of expectations. October just matched the 550,000 buildings authorized for construction in September and failed to meet forecasts for 570,000.

Similarly, housing starts disappointed by showing a decline in the annualized number of residential buildings that began construction, from 590,000 to just 520,000. With figures like these, it’s clear to see that the housing market isn’t out of the woods just yet.

The biggest downer was the CPI report, which printed a 0.2% increase in prices in October. Now, this figure isn’t bad compared to the previous month’s 0.1% rise, but it falls short of the expected 0.3% increase. The problem with having tame inflation is that it supports the Fed’s case for further quantitative easing. Naturally, investors sold off the Greenback in fear of more action from the central bank.

For today, the two big reports to watch out for are the weekly unemployment claims data and the Philadelphia Fed index.

At 1:30 pm GMT, expect to see a total of 442,000 initial claims for unemployment benefits, up from the previous week’s 435,000. As usual, be on the lookout for extreme results as the markets have been quite sensitive to U.S. employment data lately.

After that, the Philadelphia Fed index will give us a glimpse of how its manufacturing industry is doing. Last month earned a reading of 1.0, the only positive figure in the past three months. This time around, analysts are predicting an even better reading of 5.0. Can November deliver or will we see results fall back into the negative zone? Let’s find out together at 3:00 pm GMT!

380

Risk appetite made a huge comeback that not even a stellar lineup of economic reports was enough Piptorade for the dollar to hustle against its higher-yielding counterparts. Tsk, tsk. At the end of yesterday’s trading, EUR/USD was 113 pips higher at 1.3628 while GBP/USD had skyrocketed 148 pips to 1.6042.

  But it wasn’t all that bad for the dollar because it still managed to bag pips against the yen and the Swissy. That's something to smile about, right dollar bulls?

  Anyhoo, going through the economic reports, the number of people who filed for unemployment benefits last week was lower at 439,000 than what the market was eyeing at 442,000. Although [initial jobless claims](http://www.babypips.com/forexpedia/Initial_Jobless_Claims) increased from 435,000, economic gurus say that as long as the figure is below 450,000, it’s all good in the hood for the labor market.

  It was also reported that manufacturing conditions in Philadelphia improved in November with the [Philadelphia Fed Manufacturing Index](http://www.babypips.com/forexpedia/Philadelphia_Fed_Index) tapping its 9-month high at 22.5, beating both the consensus forecast of 5.0 and its 1.0 reading in October. Hollah! 

  Then to finish yesterday’s lineup, we had the leading indicators report which came in as expected at 0.5. Now, ain’t that awesome?

  Keep an ear out for [Fed Chairman Ben Bernanke’s](http://www.babypips.com/forexpedia/Ben_Bernanke) speech at the [ECB](http://www.babypips.com/forexpedia/ECB) Central Banking Conference later at 10:15 am GMT and see if he’s impressed by yesterday’s numbers. I wouldn’t keep my hopes up though.

Remember that the Fed has been on the defensive against QE2 critics so it’s more likely that we’ll hear not-so-giddy comments about the U.S. economy as he explains why more stimulus is the way to go.

  But then again, that’s just me. Good luck y’all!
381

The Greenback is off to a weak start as it gapped lower against most of its major counterparts. But with a lot of top-tier reports due from the U.S. this week, could it pull off a dramatic finish or would it continue its losing streak?

Just as my buddy Forex Gump pointed out in his latest article, the spotlight would be on the U.S. this week as it releases a bunch of high-impact economic reports. These reports could be crucial in convincing the markets, as well as Bernanke and his buddies over at the Fed, whether QE is necessary or not. Of course we all know that Big Ben already announced that the central bank would purchase 600 billion USD worth of Treasuries over the next eight months, but who knows? He still could change his mind!

First up, the U.S. preliminary GDP for the third quarter is set for release tomorrow 1:30 pm GMT. The consensus is that the report will print an upward revision from the advanced GDP reading of 2.0% to 2.3%. Along with that report, the existing home sales figure will also be announced. However, this report is expected to show that sales of existing homes in October fell a few notches from 4.53 million to 4.51 million. A weaker than expected figure could dampen demand for the Greenback. But wait, there’s more! The minutes of the latest FOMC meeting are also due Tuesday and this could shed some light on how the policymakers feel about further easing. This should be pretty interesting so you better be on your toes then!

On Wednesday, the durable goods orders figure and the core durable goods orders reading are due. These could print upticks of 0.3% and 0.8% respectively, and if the actual figures come out much better than expected, the Greenback could have a chance to bounce back from its losses. New home sales, which are also set for release on Wednesday, could bring good news too since it is expected to print an increase from 307,000 to 312,000. Also due then are the unemployment claims for the week, which are set to show that initial jobless claims reached 434,000.

Wait a minute, aren’t jobless claims usually released on Thursdays? Well, it’s Thanksgiving Day on Thursday so U.S. banks and traders will be taking some time off the markets then! The question is, will the Greenback have a lot to be thankful for this week? Stay tuned to those reports to find out!

382

Dollar domination! The Greenback came out on top yesterday as risk aversion popped its head back in the markets. Even though most majors gapped higher against the Greenback over the weekend, they were forced to close those gaps and give in to dollar strength.

Just when you thought the recent debt drama was over, it turns out that traders are still uneasy about the Irish bailout situation. You know what they say, history repeats itself. Similar to what happened when news of the Greek debt dilemma broke out, people started worrying about the possibility of contagion to nearby countries. Come to think of it, it seems like the PIIGS nations are giving in to bailouts one by one. No wonder investors are concerned that Spain or Portugal might be next!

Could today’s economic releases from the U.S. take the limelight away from the Irish debt drama? The U.S. is set to release three big reports today, namely the preliminary GDP, existing home sales, and FOMC minutes. In case you haven’t read our resident economic guru Forex Gump’s take on the upcoming U.S. releases, make sure you check it out here.

First up, the preliminary GDP could print an upward revision from 2.0% to 2.3% growth in the third quarter. Watch out for the actual release at 1:30 pm GMT since a better than expected figure could bring risk appetite back in the markets. Then, stay tuned at 3:00 pm GMT for the release of the existing home sales report, which could show that purchases dipped from 4.53 million to 4.51 million. Lastly, keep your eyes and ears peeled for the FOMC’s interesting discussion about QE and the Fed’s future monetary policy plans when the FOMC minutes are released 7:00 pm GMT.

Phew! Talk about having a full day today. Good luck trading!

383

The dollar got as much lovin’ as Kanye’s My Beautiful Dark Twisted Fantasy did on the charts! It gained against all of its major counterparts save for the yen to which it only lost 10 pips. EUR/USD ended the day 253 pips lower at 1.3371 while GBP/USD fell by 180 pips to its closing price of 1.5781.

  Continued concern over Ireland’s financial health and the clash between North and South Korea revved up risk aversion. And word on the street is that investigations about insider trading in a few hedge funds might have also gotten traders partyin’ in [safe haven currencies](http://www.babypips.com/school/to-carry-or-not-to-carry.html).

  Given this triple whammy of bad news, it seemed like the market’s focus was shifted away from the [FOMC minutes](http://www.babypips.com/forexpedia/FOMC) for November. This might have been good for the dollar as the revisions made in growth and employment reflected why the [Fed](http://www.babypips.com/forexpedia/Fed) thinks that QE2 is the way to go! 

  Despite an upward revision in the second reading of third quarter [GDP](http://www.babypips.com/forexpedia/GDP) to 2.5%, which beat both the consensus forecast of 2.4% following its initial reading at 2.0%, the central bank sees economic growth to slow in the coming months. 

  The FOMC minutes reveal that by the end of the year, U.S. GDP will print between 2.4% and 2.5%. It was previously predicted to come in between 3.0% to 3.5%. The projection for 2012 is anticipated to be in the range of 3.0% to 3.6% from 3.5% to 4.2%. 

  On the other hand, the [unemployment rate](http://www.babypips.com/forexpedia/Unemployment_Rate) is seen at 9.5% to 9.7% in 2010. In 2011, a modest decrease to 8.9% to 9.1% is estimated, higher than what was previously predicted at 8.5%. 

  In other news, we saw the continued struggle in the housing market indicated by the worse-than-expected [existing home sales](http://www.babypips.com/forexpedia/Existing_Home_Sales) report for October at 4.43 million. The market was bracing for a 4.48 million increase.

  We’ll get more data on the real estate industry later at 3:00 pm GMT with the FHFA house price index for September and [new home sales](http://www.babypips.com/forexpedia/New_Home_Sales) report for October.

House prices are expected to have declined by 0.1%, while demand for new homes is seen to offset the disappointment we saw in yesterday’s housing report with the forecast up at 311,000 from September’s 307,000 figure.

  But before that, at 1:30 pm GMT, we’ll get dibs on [durable goods orders](http://www.babypips.com/forexpedia/Durable_Goods_Orders) placed with manufacturers for October. Analysts are expecting the headline figure to come in at 0.1%.

  Along with it will be the [personal spending and income](http://www.babypips.com/forexpedia/Personal_Income_and_Spending) reports for October. The value of expenditures by consumers is seen to have been higher during the month at 0.5% than it was in September at 0.2%. An increase in disposable personal income is also anticipated at 0.4%.

  Then at 2:55 pm GMT the final version of the [University of Michigan Consumer Sentiment](http://www.babypips.com/forexpedia/Consumer_Sentiment) index for November will be on tap where an upward revision to 69.5 is seen following its previous 69.3 reading.

  Better be on your toes for these reports later as they could reel you in a mad load of pips!
384

The dollar’s scorecard in yesterday’s trading was as mixed as Huck’s Thanksgiving turkey stuffing. It gave up some of its gains to the com-dolls while it continued to stack up its wins against the euro when EUR/USD closed 42 pips lower at 1.3329.

  Word on the street is that the slight improvement in [market sentiment](http://www.babypips.com/school/what-is-market-sentiment.html) cost the dollar its pips against the Aussie, Kiwi and Loonie. But risk appetite wasn’t all bad. Some economic gurus say that along with positive labor data, it allowed the currency to pare its loss against the yen by ending the day at 83.59.

  Yesterday we saw that last week’s [initial jobless claims](http://www.babypips.com/forexpedia/Initial_Jobless_Claims) report printed its lowest reading since July 2008 with only 407,000 filing for unemployment benefits! The market had anticipated a more modest decrease of 435,000 following its previous reading of 441,000.

  On other news, we saw a bigger upward revision on the [University of Michigan Consumer Sentiment](http://www.babypips.com/forexpedia/Consumer_Sentiment) index to 71.6 than what was predicted at 69.5 from its initial reading of 69.3. 

  [Personal Income and Spending report](http://www.babypips.com/forexpedia/Personal_Income_and_Spending) also revealed that incomes by consumers was 0.1% higher at 0.5% than what analysts estimated, while spending came in 0.1% lower than what was predicted at 0.4%.

  Disappointment then followed with the [durable goods orders](http://www.babypips.com/forexpedia/Durable_Goods_Orders) and [new home sales](http://www.babypips.com/forexpedia/New_Home_Sales) reports for October. Orders placed with manufacturers declined by 3.3% during the month and missed the 0.1% uptick that the market was eyeing. 

  On the other hand, the 283,000 new houses sold in October fell short of the 311,000 consensus forecast. Remember that [existing home sales](http://www.babypips.com/forexpedia/Existing_Home_Sales) for the month also came in worse than expected.

Painting an even bleaker picture of the housing market was the FHFA house price index for September which clocked in at -0.7% in September when the market had only braced for a 0.1% decline in house prices. Yikes!

Our economic calendar is blank for hollers today, so you don’t have to worry about negative reports to weigh down the dollar. Just keep an ear out for Europe’s debt issues and the tension between North and South Korea to get a feel of market sentiment and help ya with your trades.

Happy Thanksgiving y’all!

385

The Greenback was relatively well-behaved yesterday as most major pairs stayed warm and cozy inside their ranges. It does look like the winter season’s starting to freeze up the liquidity in the markets!

The U.S. didn’t release any economic reports yesterday, allowing traders to eat their Thanksgiving turkey in peace. No economic reports are due today as most traders are off buying and selling somewhere else, taking advantage of the Black Friday deals in shopping malls. That should be good for retail sales, don’t you think? Shop 'til you drop, folks!

Only the euro zone and Switzerland have reports on their economic schedule today so better stay tuned to those releases if you still plan to trade. Also keep an eye out for any updates regarding the euro zone debt drama and the conflict between the Koreas. If you didn’t get a chance to read Forex Gump’s take on the tension in Asia, go ahead and check it out!

386

Despite the absence of economic data, the dollar was still able to rally during Friday’s trading and post wins against all of its major counterparts. EUR/USD tapped its two-month low at 1.3200 before it parked at 1.3248 with a 107-pip win for the dollar, while USD/JPY closed at its 7-week high at 84.11.

Political tension between North and South Korea and Europe’s debt woes were enough to fuel risk aversion. Consequently, these got traders screaming for the dollar like teen girls in a Justin Bieber concert. Naysayers think that since it’s unlikely for the issues to be resolved within the week, the dollar could continue its struttin’ its swagger on the charts. Boo yeah!

But aside from getting a feel of market sentiment, make sure you also take note of this week’s lineup of economic reports.

While the spotlight is on the NFP figures for November due on Friday at 1:30 pm GMT, with a consensus forecast of 145,000, take note that reports will start coming in tomorrow.

The S&P Case-Shiller Home Prices report for September will be released at 2:00 pm GMT and economic gurus are predicting a 1.3% increase. We’ll then get dibs on how business conditions were in Chicago in November with the Chicago PMI on tap at 2:45 pm. Analysts are expecting a modest slowdown in business activity with the index eyed at 60.0 following its previous 60.6 reading.

At 3:00 pm GMT, Conference Board will release the results of its consumer confidence survey for November. The market is anticipating the index to come in higher at 52.5 compared to October’s 50.2 figure.

Fed Reserve Chairman Ben Bernanke will then close the day as he talks about the economy with business leaders. You may want to keep tabs on his speech as any pessimism on the U.S. could send the dollar into the bear lair.

387

After EUR/USD tapped the 1.3300 handle, sha-bam! The dollar went blazin’, sending the pair to bottom at 1.3065 before ending the day at 1.3123 with a 159-pip gain! It also posted its fourth consecutive win against the yen when USD/JPY closed 32 pips higher at 84.26.

The greenback was able to bring sexy back for yet another day as the ongoing geopolitical tension in the Korean peninsula and the Irish bailout gave investors enough goosebumps to spark risk aversion and highlight its safe-haven rep. But let’s see how today’s trading will be for the dollar given the roster of economic reports on tap. Have you noticed that it has been quite a while since we last saw economic data from the U.S?

At 2:00 pm GMT, we’ll get dibs on how the housing market is doing with S&P and Case-Shiller’s report on home prices. Analysts are expecting prices to have been 1.3% higher in twenty metropolitan areas in September.

The Chicago PMI will then be on tap at 2:45 pm GMT. With the consensus forecast at 60.0, well above the 50.0 figure that indicates expansion, business conditions are still seen to be spankin’.

Conference Board is also scheduled to report on consumer confidence for November and the market is anticipating the index to come in higher at 52.5 compared to October’s 50.2 figure.

Lastly, we’ll hear Fed Reserve Chairman Ben Bernanke’s take on the U.S. economy at 8:00 pm GMT. Keep an ear out for any pessimistic remark as this may just end the dollar lovin’, aight? Good luck and happy trading y’all!