Daily Economic Commentary: United States

Trading Discussion News and Economy
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The greenback brought sexy back as yesterday’s reports got dollar bulls on an adrenalin high. After tapping an intraday high at 1.3826, EUR/USD plunged to a low of 1.3609. It then ended the day 174 pips lower than its opening price at 1.3635.

Let me give you a recap, ayt?

There was the stellar ISM non-manufacturing PMI for January which tapped its highest reading in 6 years at 59.4 and beat the 57.2 forecast! Digging a little deeper into the report I saw that the employment sub-component of the report also rose from 52.6 to 54.5.

The dollar began to party like it was its birthday when the report was released because traders consider the employment sub-component as a predictor of NFP figures. Does this mean that the actual payrolls report also surprise to the upside?

Err, you may want to hold your horses first. Take note that although the unemployment claims report for the fourth week of January which came in at 415,000 and topped the forecast by 5,000, its reading for the previous week was revised down to 457,000 from 454,000.

And this might be the reason why the dollar gave back all of its gains to the yen after reaching a high of 82.07, and end the day with only a 4-pip gain at 81.58.

So make sure you ain’t snoozin’ when the NFP report is released later at 1:30 GMT! The consensus is for a 37,000 increase in payrolls to 140,000 in January, while the unemployment rate is seen to have inched higher to 9.5% from 9.4% in December.

Also to better anticipate the high-caliber report, make sure you check out Forex Gump’s blog!

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It seems like dollar bears took the weekend off to start prepping for the Superbowl, as the scrilla overcame poor NFP figures to scored a touchdown last Friday! EUR/USD had a nice carry of 97 yards… I mean pips… before stopping at 1.3638.

So how bad were the NFP ratings?

The report showed that only 36,000 jobs were added last month, way off the prediction of a rise of 138,000. Yikes! Does this mean that the U.S. labor market is getting worse?

Not exactly. Word is that bad weather conditions kept people from working, which may (or may not) explain the disappointing NFP figures. In addition, the overall employment rate dropped to 9.0%, much, much lower than the 9.5% posted next month. I daresay we’ll see a huge revision in next month’s NFP report…

Looking ahead at this week’s economic calendar, aside from the usual post- Super Bowl hangover, we’ve only got a few red flags coming out.

First, Fed quarterback Ben Bernanke will be making some comments about monetary and fiscal policy on Wednesday. Seeing as how we got mixed unemployment data last Friday, it’ll be interesting to see whether Bernanke takes a more dovish or hawkish stance.

Then on Friday, we’ve got the preliminary consumer sentiment report from the University of Michigan. Expectations are that consumer sentiment on the economy picked up slightly and that the index will come in at 74.6, up from the previous month’s score of 74.2.

So there you have it folks! Good luck this week, and make sure you catch all those wonderful Superbowl commercials on the DVR – I know I will!

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With everybody stuck on their DVRs catching replays of the Superbowl and with no hardcore data released, dollar pairs pretty much remained within range. EUR/USD hit a low at 1.3508 before crawling back up to end at 1.3585, good for a 20 pip gain. Meanwhile, USD/JPY stayed within a tight range of just 31 pips, ending the day 13 pips higher at 82.31.

It seems that risk appetite is starting to come around, as higher yielding currencies like the euro and pound didn’t post further losses. In addition, equity markets fared well, indicating that traders are becoming risk hungry.

Of course, one day doesn’t make a week, and you never know when tensions from Egypt may flare up again, so be careful out there!

Looking at our uber cool economic calendar, the only report coming out today is the IBD consumer sentiment report, due at 2:00 pm GMT. Last month, the index printed a score of 51.9. If we see a significant improvement from this figure, could it spark a dollar rally?

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Without any high-caliber report on tap, the dollar was as directionless as Cyclopip when he gets tipsy. It got piptoxicated and gained against the yen and Swissy, but threw up pips against the euro when EUR/USD closed 48 pips higher at 1.3633.

The only report we had yesterday was the third-tier IBD consumer optimism survey for February. It came in at 50.9 after being at 51.9 in December, falling short of the 52.8 consensus.

Don’t worry! A few economic gurus think that the dollar’s losses had more to do with the market’s improved sentiment than the disappointing report. In case you haven’t heard yet, U.S. stocks have been tapping fresh yearly highs recently.

Fueling risk appetite even further were Fed members Fisher and Lacker who talked about further stimulus being unnecessary for the world’s biggest national economy.

Heck! Investors were in such high spirits yesterday that not even a 25-basis point interest rate hike from People’s Bank of China could keep higher-yielding currencies from partying on bull turf!

Remember back in October when the bank made its first rate hike in three years and risk aversion dominated market sentiment? Well, now it seems like investors aren’t worried that a tighter monetary policy can tame China’s growth and weigh down on the global economy.

We still don’t have any economic report on tap today, but make sure you hear out Fed Reserve Chairman Ben Bernanke’s speech later at 3:00 pm GMT. If he sounds as giddy as his buds Fisher and Lacker, we may see the dollar rally as this would imply that QE could end as early as June!

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The dollar’s scorecard in yesterday’s trading was as mixed as a bag of nuts! It lost 102 pips to the euro when EUR/USD closed at 1.3474 but gained 34 pips from the Aussie at 1.0117. USD/JPY, on the other hand, remained almost unchanged at 82.37.

Contrary to what I always say, it seems like tight lips can also sink pips! With nothing on tap on our economic calendar yesterday, the spotlight was focused on Federal Reserve Chairman Ben Bernanke as he testified at the House Budget Committee.

Naysayers think that the lack of excitement in his mumbo jumbo might have caused the dollar its losses.

Once again, he said that there is a need for the U.S. to reduce its deficit. He hinted that the Fed is not concerned about inflation and may therefore have to wait for QE to end first before raising interest rates.

I think it’s also noteworthy that he acknowledged the improvement in the labor market. Some giddy economic gurus even interpreted this as a sign that QE could end as early as June! However, with the unemployment rate still sitting way above the Fed’s target of 5% to 6%, I wouldn’t get too excited just yet.

Nonetheless, let’s see if the initial jobless claims report for last week will fuel the optimism for the U.S. labor market. At 1:30 pm GMT, traders are expecting to see that the number of people who filed for unemployment benefits was lower at 411,000 than it was in the previous week by 4,000.

Watch out for a better-than-expected figure as this may just boost the dollar.

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HA-OOH! HA-OOH! The Greenback once again showed who’s king of the pip hill yesterday after it roundhouse-kicked most of its major counterparts down the charts on a bit of risk aversion and better-than-expected economic data. EUR/USD fell by a whopping 140 pips to 1.3594, while USD/JPY sneaked a 93-pip gain at 83.30.

The awesome jobless claims report clocked in only 383,000 claims against last week’s 419,000 figure. Since the labor market has been one of the biggest headaches of the Fed, the improvement made it easier for the bulls to shop for the scrilla. The government itself managed to print a positive report when the Federal budget deficit narrowed down to 49.8 billion USD from December’s 78.1 billion deficit.

Of course, political and economic risks from abroad also helped push the Greenback up the pip charts. Worse-than-expected reports from other major economies, rumors of the Saudi Arabian King’s death and even the resignation of Egypt’s President Mubarak inspired a wave of risk aversion in markets that made the low-yielding dollar hotter than Natalie Portman in her tutu.

Will the dollar end the week with a win? The trade balance report from the U.S. is scheduled at 1:30 pm GMT today, and a deficit lower than November’s 38.3 billion USD figure could extend the dollar’s rally. Also due today at 2:55 pm GMT is the University of Michigan consumer sentiment report. An index reading higher than January’s 74.2 suggests that consumers are feeling more love for the economy, which is a good sign for businesses and employment.

Let’s bag them pips before the Valentines weekend, homies!

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The dollar strutted on the charts last Friday as if it was on a runway in New York fashion week! It traded with swagger against most of its counterparts as EUR/USD tumbled to 1.3497 from its intraday high of 1.3622, while USD/JPY closed at 83.46 after opening at 83.30.

Overall, the dollar had a good week even though it only gained 18 pips from the euro. It was able to show its stuff on the charts thanks to risk aversion that continued to loom over the markets. On top of that, all high-caliber reports from the U.S. boosted the outlook economy with data on unemployment claims, trade balance, and consumer sentiment beat expectations.

We didn’t hear Fed Reserve Chairman Ben Bernanke say anything new when he spoke. In his speech to the House Budget Committee, he remained to be concerned about the recovery of the country. Good thing there were the hawkish comments of Fed Reserve members Fisher and Warsh that provided the dollar some support.

See how this week’s lineup of economic reports will affect the dollar’s swagger on the charts.

We don’t have anything on our economic calendar from the U.S. today but the retail sales report for January is on tap tomorrow at 1:30 pm GMT, along with the TIC report for December. Note that analysts are expecting consumer spending to have increased by 0.6% during the month, following its 0.5% uptick in December.

The following day, also at 1:30 pm GMT, the building permits report for January is anticipated to come in at 570,000. Meanwhile the PPI report for the same month is expected to show that inflation pressures eased to 0.9% after printing at 1.1% in December. Then at 7:00 pm GMT the minutes of the most recent FOMC meeting will be released.

Come Thursday, the CPI reports for January will then be on tap at 1:30 pm GMT. Take note that the headline number is forecasted at 0.4%, while the core reading is seen at 0.2%.

Along with that will be the initial jobless claims report which is eyed to show that the number of people who filed for unemployment benefits during the previous week increased to 401,000 after printing at 383,000 in the previous report.

To wrap up the day will be the Philly Fed Manufacturing index for February at 3:00 pm GMT. The report is anticipated to show that manufacturing activity increased during the month, with the index seen to come in higher at 20.8 after printing at 19.3 in January.

Also keep in mind that Big Ben is also scheduled to talk on Friday 1:00 pm GMT. Keep an ear out for more optimistic words from the head honcho of the Fed as this would probably be bullish for the dollar!

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Without any economic report on tap, the dollar grooved to the beat of its counterparts in yesterday’s trading. It was able to move its currency-hips like yeah against the euro when EUR/USD fell more than a hundred pips from its intraday high to 1.3428, before closing the day at 1.3487.

Meanwhile, it danced with two left feet against the yen, as USD/JPY closed 15 pips lower than its opening price.

Reserve Bank of New York President William Dudley’s comments on the economy might have also spilled the dollar’s dancing juice and kept it from rallying. He expressed his skepticism about the decrease we saw in the unemployment rate for January. But then again, he’s widely-perceived as one of the more dovish members of the Fed, so it wasn’t much of a surprise when he hinted that he could vote for further QE.

With a handful of reports today, will the dollar be able to cha-cha all the way to the bull turf? Let’s check out the lineup, shall we?

First is the retail sales report for January. Analysts are expecting the headline figure to show that consumer spending was up 0.5%, while core retail sales is seen to come in at 0.6%. I have a strong feeling that worse-than-expected figures may cause the dollar to trip on the charts. So tune in to that later at 1:30 pm GMT!

Along with that, the Empire State Manufacturing Index for February and import prices for January will also be released. Market gurus are anticipating manufacturing activity in New York to pick up with the forecast up at 14.7, following the 11.9 figure we saw for January.

Meanwhile, prices of imported goods are seen to have increased by 0.9% albeit at a slower pace than in December when the report printed a 1.1% uptick.

The other high-caliber report we have on tap is the TIC report for December at 3:00 pm GMT. It is expected to show that foreign demand for dollar-denominated securities increased to 91.3 billion USD from 85.1 billion USD in November.

Then to wrap up the day, we’ll have the business inventories report for December at 3:00 pm GMT. If you’re planning to side with the dollar, you may want to keep your fingers crossed for a figure lower than the 0.7% forecast as this could be a signal that businesses will spend more in the future to restock their shelves.

Make sure you ain’t snoozin’ on these reports later, ayt? Peace out

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The Greenback’s price action yesterday was as mixed as Piña Colada as the U.S. also released mixed economic reports. USD/JPY ended up climbing 55 pips to its 83.83 closing price, but GBP/USD also inched higher at 1.6122. Meanwhile, EUR/USD capped the day almost unchanged at 1.3483.

Yesterday’s retail sales report failed to follow up on the string of better-than-expected data recently released from the U.S. Retail sales only grew by 0.3% in January, while December’s figure was revised down to 0.5%. Meanwhile, sales excluding automobiles stagnated to a 0.3% growth. Some say that the bad weather is to blame for the slack in sales, but others also believe that markets expected too much from the slight improvement in the labor market.

It seemed that investors across oceans also found it hard to give the scrilla some lovin’. The TIClong-term purchases report only clocked in 65.9 billion USD in December, a drop from November’s 85.1 billion figure as global demand for U.S. stocks, bonds, and other financial assets dropped.

The only silver lining in the dark cloud is the uptick in the Empire State manufacturing index, which indicates that manufacturers in New York are still optimistic on the economy. The data printed at an index figure of 15.4, an improvement from January’s 11.9 number.

Let’s see if the Greenback can bring home some love today when the building permits, producer prices, and housing starts reports are released at 1:30 pm GMT. Building permits and housing starts figures signal future construction activity and additional employment, so higher numbers could boost the dollar up the charts.

The industrial production figures are also set for release at 2:15 pm GMT. The value of output produced by manufacturers rose by 0.8% in December, but a higher number might also provide the dollar a lift.

Last to hit the pip stages is the big FOMC report today at 7:00 pm GMT. In their last minutes, all Fed members united like the members Fellowship of the Ring in supporting the Fed’s asset purchases. For the past few weeks, however, we’ve heard bullish comments from a few Fed members, so watch out for any surprises!

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Wham, bam, thank you Mr. Risk Appetite! Okay, not that catchy, but it definitely was in tune with what the markets sang yesterday! Renewed risk appetite sent higher yielding currencies on a nice run, which sadly, sent the dollar in the opposite direction. EUR/USD rose a good 88 pips from its opening price to end at 1.3571, while AUD/USD rocketed back up above parity to end at 1.0038.

So what got the markets all giddy yesterday? Why, the minutes of the latest FOMC meeting of course!

While the Fed unanimously decided to keep QE2 at current levels, this didn’t mean that they agreed on everything. Some believed the recovery was well on its way and that program could be reduced. In the end, our old buddies (I don’t mean that they are old friends – they really are old! Ha!) at the Fed decided to raise their outlook of the U.S. economy.

They now believe that GDP will grow by 3.4% to 3.9%, which is a 10% increase from earlier forecasts calling for growth of 3.0% to 3.6%. In addition, the unemployment rate is expected to tick down to 8.8%. This indicates that Fed officials are more optimistic about the economy, and maybe, just maybe, could reduce their quantitative easing program.

In addition to the somewhat hawkish results of the FOMC minutes, yesterday’s U.S. economic data also helped boost overall risk appetite. What I find interesting is that this didn’t boost the dollar, but rather, sentiment as a whole.

Building permits and housing starts came in to show good figures, printing at 560,000 and 600,000 respectively. While permits hit forecasts, housing starts came in slightly better than anticipated, as only 550,000 homes were expected to have begun construction. Take note that this comes after the brutal weather we saw in some parts of the country, so this is encouraging.

Moving on, producer price figures were also promising, despite the slightly worse than expected headline figure. The headline PPI report showed an increase of just 0.8% in January, just below forecast of 0.9%. Still, core PPI, which doesn’t include food and energy costs, rose by 0.5% after expectations were for an increase of 0.2%. Overall, rising prices indicate that demand is on the rise, which of course, is good for the economy.

Industrial production figures, however, weren’t as positive as the markets were hoping. Production dropped by 0.1%, failing to hit targets of 0.5% growth. Still, there was some good news to smile about, as the December’s figure was revised up from 0.8% to 1.2%.

Looking at our economic calendar, it looks like we’ve got another busy day ahead of us, with a slew of reports scheduled for release. At 1:30 pm GMT, we’ll have more inflation data on deck, as the monthly CPI report is due. Consumer prices are projected to have risen by 0.3% in the last month. A figure higher than this would indicate stronger demand pressure, which could help the dollar rally.

Also scheduled for release at 1:30 pm GMT is the weekly unemployment claims report. Unemployment claims are expected to rise slightly from 383,000 to 401,000 for the past week.

Later on at 3:00 pm GMT, the Philly Fed manufacturing index is due. Word is that conditions are improving, and that this will be reflected in the index as it’s projected to print at 20.8, a slight improvement above January’s score of 19.3.

Will good results help boost the dollar? Or will risk sentiment take over and boost other higher yielding currencies? Only one way to find out! Good luck today my friends!

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And just like that, it seems that risk sentiment is driving the market! Despite the release of positive economic data, the dollar found itself on the losing end yet again in yesterday’s trading. EUR/USD rose 36 pips to close at 1.3607, while GBP/USD managed to gain 74 pips to end at 1.6169.

First, let’s start with the bad news. Initial jobless claims came in slightly worse than expected, printing at 410,000. This was significantly bigger than last week’s release of 385,000, and higher than the 400,000 forecast.

Still, it seems that traders decided to ignore this, focusing instead on the positive reports that were released.

The CPI report showed that consumer prices rose by 0.4% last month, slightly higher than the forecasted 0.3% figure. Core prices also rose more than expected, rising by 0.2%, opposite the 0.1% expected increase. This was taken as good news, as rising inflation is a reflection of rising demand.

Moreover, we got a bigger surprise when the Philly Fed Index came in at 35.9, way better than the predicted score of 21. How good was this? Well, this marked the index’s best score since 2004. 2004 people! Shaq was still with the Lakers and Nicolas Cage was still doing decent movies!

Anyway, you might be asking, if these reports were positive, why didn’t the dollar rally?

While the U.S. economy has been showing signs of life, the Fed may decide to stick “behind the curve” in terms of tightening monetary policy. Kinda ironic if you think about it, since the Fed was one of the first to act and implement stimulus measures. In any case, if the Fed continues to take a wait-and-see approach, we could see currencies like the euro and pound find support as inflationary concerns pressure their respective central banks into raising rates sooner rather than later.

Nothing coming out from the economic assembly line today, but watch out today as Fed President Ben Bernanke will be talking in Paris. In addition, the G20 will be meeting over the weekend, and who knows, maybe we’ll hear cat calls about the value of the dollar and yuan…

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Just like Justin Bieber’s [I]Never Say Never[/I], the Greenback fell across the charts last Friday despite the lack of economic reports released from the U.S. EUR/USD whizzed higher by 79 pips to 1.3686, while USD/JPY plunged to its 83.11 closing price after hitting an intraday high of 83.53.

It seemed that currency bulls were still on a high from positive U.S. reports early in the week, as they dumped the Greenback and headed for high-yielding currencies. But Fed officials aren’t out of the hot water just yet! It’s gonna take more than a few positive economic reports for investors to restore confidence in the U.S. economy, especially if unemployment is still at its stubbornly high rates.

With the U.S. celebrating President’s Day today, market’s focus will be directed at the G20 pajama party in Paris over the weekend. My forex minions tell me that G20 economies are talking about global trade imbalances, and that China is taking a lot of heat for its monetary policies. Hot stuff, don’t ya think? Better stay tuned for developments on this one then!

Meanwhile, you can also wait for other red flags scheduled for a parade this week. We’ll see tons of housing-related reports from the S&P house price index tomorrow at 2:00 pm GMT to the existing home sales on Wednesday, and the new home sales report on Thursday.

Also due for release this week are the CB consumer confidence tomorrow at 3:00 pm GMT, core durable goods orders on Thursday, and the preliminary GDP report for the fourth quarter of 2010 on Friday.

Warm up those trading muscles for these big-hitters, homies!

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Were the dollar bears also on vacation yesterday? The Greenback got a breather from all the bad vibes yesterday when it inched higher against its major pip buddies. A bit of risk aversion in markets dragged EUR/USD by 28 pips to 1.3677, while USD/JPY climbed by 6 pips to 83.12.

While my comrades in Wall Street were extending their weekend on Presidents Day, the world market wrestled with risk appetite. Trouble in Libya, the world’s eighth largest black crack producer, inspired rumors of a freeze in production. This scared off many risk-lovin’ bulls, and boosted the low-yielding dollar up the charts.

Today the U.S. will get back to chugging out economic reports, so keep an eye out for any surprises! At 2:00 pm GMT we’ll get hold of the S&P house price index report. Since the housing market is one of the biggest headaches of the Fed, a number better than the previous 1.6% decline in house prices could give momentum to the Greenback rally.

Meanwhile, the CB consumer confidence report will also be released today at 3:00 pm GMT. January’s 60.6 figure is the highest level since May 2010, so a better reading might push the dollar higher in the charts.

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With upbeat data and risk aversion working for it, rackin’ up pips was a walk in the park for the dollar! It gained against almost all of its major counterparts yesterday! From its opening price of 1.3680, EUR/USD fell to a low of 1.3524 before it bounced back to close at 1.3671, while GBP/USD dropped 70 pips to 1.6156.

Take a deep breath, kiddos! You smell that? That’s the smell of risk aversion! Japan’s downgraded debt rating, tension in Libya, and another disastrous earthquake in New Zealand created the perfect environment for the U.S.’s rally. The dollar was once again the lucky beneficiary of safety flows as economic uncertainty across the globe turned risk sentiment sour.

To top it all off, the U.S. published better-than-expected data to boot!

The consumer confidence report ticked up from 64.8 to 70.4 in February, besting forecasts for a reading of 65.5. It seems people are starting to feel more optimistic about the labor situation in the U.S., and this has resulted in a brighter outlook for the economy as a whole.

Similarly, the Richmond Fed manufacturing index, which gauges manufacturing conditions in the Richmond Fed district, showed a surprising rise. The index printed a reading of 25, exceeding forecasts for a repeat of January’s reading of 18. This is another piece of evidence pointing towards the U.S.’s recovery, I would say!

Let’s see if this streak of positive reports will continue today!

At 3:00 pm GMT, the January existing home sales report is slated to show a tiny decline from 5.28 million to 5.20 million. Basically, the markets are expecting to see a 1.1% decrease month-on-month. As you know, the housing sector has been a sore spot for the U.S., so an upside surprise in this report could spark another dollar rally!

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The bears are back in town! Yesterday the euro and the pound joined the bears’ party and clobbered the scrilla down the charts even though positive economic reports were printed from the U.S. After reaching an intraday high of 1.3788, EUR/USD closed 94 pips higher than its open price at 1.3747. Meanwhile, GBP/USD also posted a 78-pip gain at 1.6208 after peaking at 1.6274.

Isn’t risk aversion still on? Why is the Greenback sliding? Well, maybe it has something to do with good ‘ol interest rates. You see, if ruckus in the Middle East continue to push prices of oil and other commodities higher, central banks like the BOE and the ECB might be forced to increase their interest rates earlier than expected. The latest MPC already has another hawk in its latest minutes, while a few ECB members have also been changing their tunes on interest rates.

Even yesterday’s positive housing market figures failed to tame the bears. Existing home sales surged by 2.7% in January, while December’s figure was also revised higher. The data would’ve given off good vibes if only the average home prices hadn’t declined to its lowest level in nine years. The average cost of homes in January clocked in at $206,700, which is less than December’s $217,900.

Let’s see if the dollar can pick up the slack today when the jobless claims are released together with the core durable goods orders at 1:30 pm GMT. Analysts are seeing a drop to 405,000 for the initial unemployment claims, while orders of durable goods excluding transportation is expected to pick up by 0.4% in January.

Last major report to hit the U.S. today is the new home sales data at 3:00 pm GMT. Sales of new homes are expected to slip to 304,000 from its December figure, but keep an eye out for any surprises, will ya?

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“[I]Put your hands in the air say yeah yeah yeah…[/I]” The dollar bears were partying in the pip streets yesterday as they pushed the Greenback down the charts. EUR/USD gained by another 54 pips at 1.3801, and USD/JPY plunged by 62 pips to 81.88. Meanwhile, USD/CHF also continued its drop and ended the day 72 pips lower at .9263.

 Concerns on [commodity](http://www.babypips.com/blogs/piponomics/oil-turmoil-and-how-to-profit-from-it-all.html) production have been pushing its prices up the charts lately, which could boost inflationary pressures as companies pass on their higher costs to consumers.

If you’ve been reading the best forex education site lately, you’ll know that central banks usually respond to high inflation with higher interest rates. Heck, a few members of the BOE and the ECB are already hinting at a rate hike! In contrast, the Fed is maintaining its dovish stance, which is probably why some traders are flocking to other currencies like the euro.

Of course, mixed reports from the U.S. didn’t do much for the dollar either. Though jobless claims dropped to 391,000 from its 413,000 figure last week, the new home sales report surprisingly dropped by 12.6% in January to 284,000 from 325,000 last December.

House prices also declined by 1.9%, which suggested that consumers are buying because of the discounts. Meanwhile, orders for long-lasting goods not including aircraft dropped by 3.6% in January after growing by 3.0% in December.

Today the focus will be on the preliminary U.S. GDP report at 1:30 pm GMT. Markets are expecting a 3.3% growth for the fourth quarter of 2010, but a higher number might bring some of the pip love back to the dollar.

Then, at 2:55 pm GMT we’ll also see the revised University of Michigan consumer sentiment. The data clocked in at an index number of 75.1 a few days ago, so an upward revision might entice the dollar bulls to wake up from their siesta.

Enjoy your last trading day of the week!

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And the dollar’s slide continues! Weak economic data mixed with dovish comments from FOMC members to deal the dollar another dose of poison that sent USD/JPY 22 pips to 81.66. Against the euro, it fared much better as the euro had problems of its own to deal with. EUR/USD fell 48 pips to 1.3753.

What’s up in the U.S.? Certainly not its GDP! The fourth quarter’s GDP growth was revised down from 3.3% to 2.8%, mostly because of a slump in spending. The government has been cutting back on its costs and consumers haven’t been making it rain much either lately.

On another note, dovish comments from Fed members Bullard and Lacker accelerated the dollar selloff. Though they AREN’T voting FOMC members, their cautious words added to the bearishness last Friday. According to the two doves, ending quantitative easing in June may not be a good idea. Hmm… Is that QE3 I smell?

But enough of last Friday’s news, let’s check out what the reports await us this week!

Today, the U.S. is scheduled to publish personal spending data at 1:30 pm GMT. Analysts say growth likely softened from 0.7% to 0.5% in January.

Also at 1:30 pm GMT, the core PCE price index is slated to show a 0.1% rise in prices, up from 0.0% in December. A strong reading from this report would confirm that the U.S. is starting to come under stronger inflationary pressures, and this would strengthen the case for a Fed rate hike later in the year.

Then at 2:45 pm GMT, Chicago will give us the lowdown on its business sector when the Chicago PMI comes out. Forecasts are for the index to tick down from 68.8 to 67.9.

Last but not least for today, we’ve got pending home sales data on tap at 3:00 pm GMT. Expect to see a reversal of December’s 2.0% growth as forecasts see a 2.2% decline in January.

For the rest of the week, no doubt, the highlight for the dollar will be the U.S. employment reports. On Wednesday, the U.S. will be printing its ADP nonfarm employment change report. Analysts are anticipating a net increase of 180,000 to follow up the 187,000 net increase seen last month.

And then of course, we have the all-important nonfarm payroll report due on Friday. Most are predicting a strong net increase of 176,000 after last month printed a disappointing 36,000 rise. Will this give dollar bulls the mojo to end the dollar’s slide? If the results match forecasts, it just might!

That’s it for this week folks! Make yo mama proud by making some pips!

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The Greenback’s performance yesterday was as mixed as the reactions to the Oscar winners. It lost ground to the pound and the commodity currencies but managed to outpace the Japanese yen and the Swiss franc. With a couple of red flags on deck, the U.S. dollar could find a clearer direction today. The question is, which way will it go?

But first, let’s have a quick review of the economic data released yesterday.

The U.S. pending home sales report failed to meet expectations as it printed a 2.8% decline for the month of January, larger than the projected 2.2% drop. What’s worse is that the previous month’s figure was revised downward to show a 3.2% decrease instead of the 2.5% increase initially reported. That’s a huge step down, I must say!

On a brighter note, the Chicago PMI came in better than expected as the index rose from 68.8 to 71.2 in February. This was better than the consensus of a decrease to 67.9, indicating that manufacturing conditions in the area are improving.

Now, onto today’s big events! Fed Chairman Ben Bernanke is scheduled to testify today and I’m sure plenty of traders will be all eyes and ears on his speech, eager to find out whether the Fed is getting ready to end their quantitative easing or not. Will Big Ben side with the hawks or doves? Central bank policymakers seem to be divided on this issue, as some insist that it’s too early to withdraw stimulus while others maintain that it’s about time they do. But with Bernanke recently remarking that inflation isn’t much of a problem in the U.S., the odds are that the Fed Chairman would decide to keep stimulus in place. Whatever his stance may be, there’ll surely be a lot of fireworks during his speech so y’all better stay on your toes around 3:00 pm GMT!

Also due today is the ISM manufacturing PMI, which is expected to print a slight uptick from 60.8 to 60.9. If the actual figure beats expectations, it could be bullish for the Greenback so make sure you stay tuned to that report due 3:00 pm GMT today.

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The U.S. may have printed a better-than-expected ADP report, but this did almost nothing to end the dollar selloff. USD/JPY inched 3 pips lower to 81.89 as EUR/USD continued its uptrend and rose another 95 pips to finish at 1.3866.

In printing a 217,000 net increase in jobs in February, the ADP non-farm employment change report topped forecasts for a 178,000 net increase.

This data suggests that we may continue to see the labor market improve in the first quarter of 2011. Hmm… This may give us a clue as to how Friday’s NFP data will turn out. After all, employment in February should be able to put up good numbers since any factors that held the job count down in January should reverse in the following month.

In other news, Bernanke once again said that the Fed is still on track to complete QE2. But he also isn’t ruling out the possibility of expanding asset purchases in case the situation calls for it. QE3, perhaps? It seems the Fed is really hell-bent on seeing that the economy doesn’t fall into a double-dip recession.

For today, keep an eye out for the ISM non-manufacturing PMI at 3:00 pm GMT. Forecasts are for the index to tick up from 59.4 to 59.6, but there is potential for an upside surprise, so be sure to catch the release!

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The dollar was pushed and tugged all over the charts as the markets scrambled to get their bearings ahead of today’s big NFP report. On one hand, it was able to gain ground against the yen, with USD/JPY rising 48 pips to 82.37. But on the other hand, it lost big time to the euro as EUR/USD rose another 94 pips to end at 1.3960.

Yesterday’s good news did little to guide dollar traders to a single direction. Weekly initial jobless claims dropped from 388,000 to 368,000. The fact that it beat forecasts, which had the number rising to 394,000, suggests that the labor market is beginning to pick up steam. Now, I’m not the type that gets easily excited, but I do believe this recent trend we’re seeing should make markets more optimistic for the job market in the near future.

Adding to the good news was the ISM non-manufacturing PMI, which one-upped forecasts by raising its reading from 59.4 to 59.7 in January, rather than the expected 59.6 figure. This sort of improvement is exactly what you’d like to see ahead of the NFP report because the services sector is the most important driver of employment.

I’m pretty sure today’s NFP report had something to do with the markets indecisiveness yesterday! It can be difficult to take a stance on the dollar right before the release of one of the biggest monthly reports.

If you read Forex Gump’s guide to today’s NFP, then you’ll know that it has failed to meet forecasts for the past three months. But things are looking up this time around. February has potential to score a nice improvement from January’s figures because of January’s bad winter weather.

So this time around, we may see better-than-expected results than the forecasted 180,000 net increase in jobs. In turn, this is expected to result in a slightly higher unemployment rate of 9.1%, up from 9.0% in January. Strap your trading hats on and get ready to rumble at 1:30 pm GMT!