Daily Economic Commentary: United States

Trading Discussion News and Economy
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Since U.S. traders were off celebrating Presidents’ Day, there was no one to save the Greenback from getting clobbered yesterday. Higher-yielding currencies slowly edged upwards as risk appetite improved in the markets. EUR/USD closed 39 pips up from its 1.3198 open price while USD/CHF dipped below the .9100 handle.

Optimism surrounding the Greek debt deal kept risk appetite in the markets yesterday as traders awaited the Greek Parliament’s decision on what to do with private sector bond holdings. Another factor that triggered risk rallies was China’s RRR cut of 50 basis points, which could boost growth in the world’s second largest economy later on.

The U.S. economic schedule is still empty for today, which means that the Greenback could take its cue from risk sentiment yet again. Make sure you keep your eyes and ears peeled for any updates regarding the Greek debt deal because this issue appears to be driving sentiment lately. Good luck!

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Even with the Greek debt deal getting passed, traders weren’t quite in a rush to celebrate. Most pairs remained unchanged, as did the dollar. The dollar index closed at 79.528, just a few pips ticks above its opening price at 79.473. What could be in store for us today?

It seems that even with the passing of the Greek debt deal, traders remain wary about the whole situation. This was a little unusual, as one probably would have expected a stronger reaction once the news hit the airwave. To find out more on the debt deal, make sure you check out my euro zone commentary!

For today, we’ve got existing home sales figures coming in at 3:00 pm GMT. Expectations are that the annual pace of existing home sales will print at 4.66 million, slightly higher than the 4.61 million we saw last month. Should we see an even higher figure, we could see risk appetite spruce up, with traders loading up their positions on higher yielding currencies.

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The dollar could’ve had it all, rolling in deep pips during yesterday’s trading. It was able to post wins against all of its major counterparts that is, except for the euro and the Swiss franc. EUR/USD traded within a tight range of about 50 pips and closed 7 pips above its opening price. Meanwhile, USD/CHF ended the day 14 pips below its opening price at .9106.

It looks like investors are still jittery following the Greek debt deal announcement. And so, the lack of any significant updates regarding the bailout package left EUR/USD and USD/CHF in consolidation. With that said, it would be a good idea to keep tabs on the debt-ridden country.

Also be sure to be on your toes for the economic data we have on tap today because it seems like the existing home sales report released yesterday helped fuel the dollar’s against its other counterparts. It was reported that there were only 4.57 million residential buildings that were sold in January, falling short of the market’s 4.66 million consensus.

Later today we’ll have the unemployment claims report to tune in to. Due at 1:30 pm GMT, it is expected to show that 355,000 people filed for jobless benefits last week.

Given the current market environment, a worse-than-expected figure will probably be bullish for the dollar as it would help fuel risk aversion. So stay tuned!

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The safe haven U.S. dollar index found itself on the losing side of the fence yesterday as various positive news reports from all over the globe came out. The U.S. dollar index which tracks the performance of the currency against a basket of major currencies fell to 79.08, 61 basis points lower from its opening level.

In the euro zone, for instance, the German IFO business climate survey beat forecast. Additionally, in the U.K., both the BBA mortgage report and CBI distributive trades survey went above consensus.

On the other hand, the initial jobless claims in the U.S. was pretty much in line with expectations. it came in at 351,000, which was just slightly lower than the 352,000 initially predicted.

Today, the only red flag on the economic calendar of the U.S. is the new home sales report at 3:00 pm GMT. It is slated to increase to 316,000 from last month’s 307,000. The revised numbers on the University of Michigan survey is also set to print, but those numbers have rarely moved the market in the past.

As I mentioned yesterday, given how the market has been mainly moved by risk, better-than-expected figures could actually end up being negative for the dollar.

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The dollar brought its A-game on against the yen and closed at its 7-month high at 81.01 on Friday. However, it seems like the currency didn’t have enough piptorade left to win against its other counterparts. It scored losses against the euro, pound, Swiss franc, and Kiwi.

In my own opinion, I think that for the most part, the shift in market sentiment is behind the dollar’s mixed scorecard. Keep in mind that when risk appetite is up, both EUR/USD and USD/JPY usually rise which is exactly what we saw on Friday.

As I mentioned in my EUR commentary, the most recent catalyst that sparked risk-taking was Greece’s invitation to its bondholders to exchange their bonds for new ones. So with that said, be sure you keep an ear out for news that could affect the mood of investors.

I also have a feeling that the positive reports we got from the U.S. gave investors another reason to buy higher-yielding currencies too.

It was reported that new home sales for January was up at 321,000 and topped the market consensus which was at 316,000. On top of that, we saw a bigger upward revision in the University of Michigan consumer sentiment index for February. Analysts were only expecting the index to come in at 72.8 after being initially reported at 72.5. However, the revised figure came in at 75.3.

Our forex calendar has the pending home sales report for January on tap today so be sure you don’t miss it! At 3:00 pm GMT, it is expected to show 1.1% uptick and erase part of the 3.5% decline we saw for December 2012.

Given the current market sentiment, a better-than-expected figure will probably helped fuel risk appetite and could be bearish for the dollar. But that’s just my two cents. Good luck!

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Revenge! After its poor performance late last week, the Greenback was able to retrace some of its losses and slightly rally against most major currencies yesterday. It gained 69 pips over the pound and 65 pips over the euro.

Over the weekend, the G20 provided no important new developments. The event turned out to mainly an [I]announcement of an announcement [/I]that a discussion would take place in April on how they could possibly boost IMF resources.

The only important news report released yesterday was the Pending Home Sales. It came in with a 2.0% gain, significantly higher than the 1.1% increase initially predicted and opposite the previous month’s 1.9% decline.

Today, there are a few red flags on the U.S. economic calendar. At 1:30 pm GMT, the report on durable goods orders will be released. The headline number is expected to come in at -0.8% while the core version is slated to show a flat reading.

At 2:00 pm GMT, the monthly Standard & Poor’s/Case-Shiller house price index will be published. It is anticipated to show that house prices fell 3.6% in December. If forecast holds, it would mark the thirteenth straight decline in prices.

Lastly, at 3:00 pm GMT, the Conference Board’s consumer confidence survey will come out. The market expects the reading to rise to 63.1 from 61.1 last month.

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Rough day for the scrilla, as it found itself at the bottom of the dog pile yesterday. The dollar lost against most of its major counterparts, as EUR/USD, GBP/USD, and AUD/USD all posted decent gains. With the month coming to an end, will the dollar show its might or will it sink to further lows?

We got mixed economic data yesterday, as headline and core durable goods fell by -4.0% and -3.2% respectively, which was much worse than the -0.8% and flat growth expectations. However, consumer confidence seems to have improved, as the CB consumer confidence index printed at 70.8, which was way better than last month’s score 61.5.

I suppose this can be clearly seen in the equity markets, as the Dow Jones Industrial Index closed above 13,000, its highest level since 2008! Boo yeah! Tequila shots for everybody baby!

In any case, it’s clear that risk sentiment is currently driving the market and that’s why we’re seeing the dollar slump. Fund managers are choosing to invest in higher yielding assets and need to convert their dollars in order to invest abroad.

Looking ahead, we’ve got a TON in store for us. You sure you’re ready?

Preliminary GDP figures are due at 1:30 pm GMT and word on the street is that Uncle Sam grew by 2.8% last quarter. Take note that this is the second of three quarterly GDP reports and that over the past three releases, we have seen a downward revision each time. Don’t be surprised if the trend continues today!

Later on at 2:45 pm GMT, the Chicago PMI will be available. The index is projected to print at 61.6, which would mark a slight improvement from last month’s reading of 60.2.

At 3:00 pm GMT, Big Boss Ben Bernanke will be speaking in front of the House Financial Services Committee in Washington D.C. Seeing as how Bernanke will actually be talking about monetary policy, it would be prudent to listen in and hear what he has to say. Who knows, he might just drop some hints as to when he plans to raise rates or add another round of quantitative easing measures!

Lastly, the FOMC Beige Book will hit the markets at 7:00 pm GMT. This report helps provide insight as what exactly the FOMC is looking at and considering when it makes decisions regarding monetary policy.

Now if all those reports weren’t enough, we also have to take into consideration that it’s the end of the month, which means we could see some position covering. Also, don’t forget that the ECB will be conducting its LTRO program today and who knows how that will affect sentiment during the London session!

Hope you’re all rested up homies, cause today might just be a very long one!

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Thank you good data! The better-than-expected results on U.S. economic reports proved to be very beneficial for the dollar yesterday. It helped the currency rally across the board, which resulted in the U.S. dollar index closing the day with a 1% gain.

The U.S. preliminary GDP report showed that the country actually grew 3.0% during the final quarter of 2011, much higher than the first estimate of 2.8%. Meanwhile, the Chicago PMI came in with a reading of 64.0, 3.4 points higher than forecast. It was also an improvement from the previous month’s 60.2.

The contents of the Fed’s Beige Book also shared the same upbeat tone. It revealed that all 12 Fed districts believed that economic activity has “increased at a modest to moderate pace.” Moreover, the Beige Book was markedly more optimistic regarding the housing and labor markets.

Today, there are a number of economic reports that will have a strong impact on the U.S. dollar again. Let me go through them one by one.

At 1:30 pm GMT, the weekly unemployment claims will be released. The market is anticipating a 350,000 figure, a small decline from last week’s 351,000.

The Personal Spending and Personal Income reports will also be published at the same time. The forecast is an increase of 0.4% for spending and 0.5% for income.

Then, at 3:00 pm GMT, the ISM Manufacturing PMI will come out. It is expected to print a reading of 54.6, up from last month’s 54.1.

If the upcoming reports were to beat the market consensus, we could see the dollar strengthen again later.

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Mixed day for the scrilla, which continued to rise versus the euro and franc but lost out against the pound and the comdolls. Will we see more of the same results in today’s trading?

One reason why the dollar lost out against the other major currencies was due to a risk rally that occurred midway through the New York session. With traders and fund managers more than ready to drop their Benjamins on higher yielding assets, the dollar was sold off in bunches.

Looking at economic data released yesterday, we actually saw some mixed results as well.
Unemployment claims printed in line with expectations at 351,000. The recent decline in weekly jobless claims is good news for the labor market, as claims were hovering around 400,000 for the longest time.

The core PCE Index, which is the Fed’s preferred measure of inflation, showed that inflation remains subdued at just 0.2%. In theory, this should give the central bank even more room to inject liquidity (a.k.a QE3!) should it choose to do so.

But of course, we can’t forget that Fed head honcho Ben Bernanke said that additional quantitative easing measures wouldn’t be necessary in a speech yesterday!

In other news, consumer spending and the ISM manufacturing PMI report both disappointed the markets. Spending grew by just 0.2% last January, which was half the expected 0.4% uptick. Meanwhile, the manufacturing PMI printed at 52.4, after it was expected to rise to 54.6. Still, growth is growth and hopefully this was just a small bump in the road to recovery.

No biggies on the docket today, so we may not see some of the big moves that we’ve seen this past week. In any case, stay tuned in and be ready for anything! You never know what might rock the markets like a Kanye and Jay-Z collaboration!

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And the dollar ends the week with a sweep! European currencies, comdolls, and even the mighty yen gave up pips as the Greenback brought sexy back in Friday’s trading.

EUR/USD dropped 101 pips from its opening price to close the day at 1.3205. On the other hand, USD/JPY ended the day 69 pips higher at 81.80.

We didn’t have any economic data on tap from the U.S. on Friday, but the good vibes brought about by the better-than-expected reports that we saw from the country earlier on in the week still lingered and supported the dollar on the charts. You see, the string of positive data that we’ve recently gotten from the U.S. have made quite a few investors excited, saying that the recovery could be strong enough for the Fed to raise rates by 2013.

Of course, all these talks are merely speculations. In my opinion, it’s better that we wait for more signs to confirm that recovery is indeed gaining momentum before jumping to any conclusions.

With that said, be sure you don’t miss the ISM non-manufacturing PMI for February due to be released later today at 3:00 pm GMT. Take note that the index is expected to print at 56.1. Along with that, we’ll also have the factory orders report for December on tap which is eyed at -1.3%.

Better-than-expected figures may just get traders giddy for the dollar in today’s trading again, so watch out!

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The dollar’s price action was as mixed as a bag of beans yesterday as traders priced in the major reports hitting our way in the next couple of days. The Greenback posted gains against the comdolls, but weakened against its European counterparts. Wait a minute, what the heck happened?

As it turned out, investors didn’t feel any love for the high-yielding comdolls yesterday when China surprisingly lowered its 2012 economic growth forecasts to 7.5%, which is way below the usual 8%. It didn’t help that economic reports from commodity-related countries were weaker-than-expected either.

Too bad that demand for the low-yielding dollar didn’t extend to its European counterparts! Profit-taking, as well as positioning ahead of the important economic events coming up this week probably influenced the dollar weakness. This is reflected on EUR/USD, GBP/USD, and USD/CHF’s price action yesterday. Never mind that the U.S. actually clocked in decent reports!

The ISM non-manufacturing PMI released yesterday hinted at the same strength that we saw in the manufacturing PMI. The data printed a 57.3 reading in February when analysts were only expecting the figure at 56.1.

Meanwhile, factory orders showed a 1.0% decline for the month of January. The figure is weaker than the 1.4% growth we saw in December, but it’s still a bit higher than the expected 1.3% contraction.

Economic boards are empty in the U.S. today, but that doesn’t mean that you shouldn’t watch for other reports that might influence the dollar! Remember, a lot of big events are scheduled for this week, so make sure you stick around to catch pips in case of strong price action!

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The Greenback showed 'em who’s boss yesterday as the safe-haven currency raked in gains from most of its major counterparts, except for the Japanese yen. USD/JPY opened at 81.48 then ended the day 15 pips below the 81.00 handle while EUR/USD edged close to the 1.3100 handle. Will the safe-haven rallies continue today?

Risk aversion popped its ugly head back in the markets yesterday when concerns about Greece and its bond swaps hit the airwaves. Apparently, the worst isn’t over yet! The rest of the details are in my euro zone economic commentary, but you should know that the outcome of the ISDA talks is very uncertain and that a credit default is still a looming possibility.

In terms of economic reports, the U.S. didn’t release any data yesterday. Today is a different story however, as the U.S. is set to print its ADP non-farm employment data, which is usually considered a preview of the upcoming NFP report. The ADP figure is expected to come in at 204K for February, higher than January’s 170K reading, which could spell good prospects for the jobs data due Friday. Stay tuned for the actual figure due 1:15 pm GMT.

Other than that, the U.S. economic schedule is pretty much empty for the rest of the day, which means that the Greenback could be driven by risk sentiment yet again. Make sure you keep an eye out for any updates regarding Greece’s bond swaps as well!

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The Greenback has been unable to find a clear direction in the last 24 hours as it has just been bouncing around in a sideways range against other major currencies. Versus the euro, for instance, the Greenback rallied strongly during the European trading session but quickly gave up all of its gains after the session ended.

The absence of “real” moving data was the main reason behind the Greenback’s lack of direction. The release of the ADP non-farm employment change was a non-event as traders chose to remain flat ahead of the Greek bond swap deal which will take place later today. In any case, the ADP non-farm employment change came in at 216,000, slightly higher than the 204,000 initially predicted.

Today, the only red flag on the U.S.’ forex calendar is the weekly initial jobless claims. The report is predicted to show that 352,000 people claimed for unemployment insurance, 1000 more than the figure last week. With the Greek bond swap deal coming up, don’t expect the report to have a significant impact on price action.

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The Greenback was one of the biggest losers in yesterday’s competition as traders rushed to cover their short positions prior to the Greek PSI announcement. EUR/USD surged to a high of 1.3292 before closing at 1.3267 while GBP/USD landed above the 1.5800 handle. Are the safe-haven rallies really over?

Aside from profit-taking, another factor that clobbered the Greenback yesterday was risk appetite from optimism that Greece will be able to reach its target of at least 90% participation rate in the private sector bond swaps. As Forex Gump explained in his Greek Bond Swaps 101 article, a 90% participation rate can prevent the activation of the Collective Action Clauses, which could keep Greece from going into default.

As for economic data, only the weekly jobless claims report was released by the U.S. yesterday. The actual data missed expectations as it clocked in a 362K reading instead of the projected 352K figure. However, the bigger labor report on deck is the upcoming NFP data due 1:30 pm GMT today. The report is expected to show a 209K increase in hiring for February, a tad less than the 243K figure for January. This might be enough to keep the U.S. jobless rate at 8.3% for the month. If you’re planning to trade this news release, make sure you check out Forex Gump’s article on what to expect for the February NFP.

Also due today is the U.S. trade balance which could print a 48.9B deficit for January. Stronger than expected U.S. economic data could keep risk appetite in the markets so make sure you stay tuned for these releases.

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The dollar put on a show last Friday as it flexed its muscles and gained ground against all of its major counterparts. Thanks to upbeat employment data, it had no trouble finding buyers. It was downright beastin’! EUR/USD erased all of its gains from Thursday to post a 152-pip slide as it greeted the weekend at 1.3115.

February’s NFP really got the ball rolling for the dollar is it exceeded expectations. Rather than printing an increase of 209,000, the report indicated that the labor market added 227,000 jobs last month. What’s more is that the previous month’s gains of 243,000 were revised up to 284,000! Even though the unemployment rate held steady at 8.3%, these numbers were good enough to cap the best six-month streak of job growth since before the start of the financial crisis!

In other news, the U.S.'s trade deficit widened from 48.9 billion USD to 52.6 billion USD in January, its largest gap since October 2008. Whether or not this will deal a blow to GDP is yet to be seen, but some analysts aren’t feeling optimistic. As a matter of fact, Goldman Sachs slashed its 1st quarter GDP forecasts from 2% to 1.8% after seeing the report!

The thing to consider now is how all of this will play into the Fed’s monetary policy decisions. Some analysts believe that the recent signs of improvements in the economy will push the central bank to tighten its policy by next year. But keep in mind, the Fed’s own forecasts predicted a rate hike no sooner than 2014.

This week, we have no shortage of heavy U.S. reports, but you’ll have to wait until tomorrow if you plan on trading them.

First up is retail sales data, due at 12:30 pm GMT tomorrow. Look for retail sales to rise by 1.1% in February after posting a 0.4% increase in January.

A few hours later, at 6:15 pm GMT, we’ll have the highlight of the week - the FOMC statement. Don’t even think about missing this event as we’ll finally see how the Fed will address the recent signs of improvements in the economy. Will it affect Fed members’ rate forecasts? You’ll just have to tune in tomorrow to find out!

The rest of the week will be littered with other tier 1 events. On Wednesday, Ben Bernanke will deliver a speech. On Thursday, we’ll have PPI, unemployment claims, TIC long-term purchases, and the Philly Fed manufacturing index on tap.

Then we’ll cap the week off with the CPI report and preliminary University of Michigan consumer sentiment index on Friday. Phew! So much to look forward to this week, eh? Let’s make it count!

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It’s payback time! For the low-yielding currencies, that is. Save for the euro, the Greenback continued to dominate its high-yielding counterparts yesterday with Cable slipping by 27 pips to 1.5641. Meanwhile, USD/CHF also registered a 35-pip loss at .9166 and USD/JPY fell to 82.23. What’s up with that?

It certainly wasn’t from any economic report. Only the Federal budget balance data was released yesterday, so traders focused on risk sentiment ahead of the major reports scheduled for the rest of the week. In the budget report, the Fed reflected a 231.7 billion USD budget deficit, which is a heck of a lot more than the 27.4 billion USD deficit that we saw in January.

Thank goodness the report didn’t affect the dollar too much then. Apparently, concerns on a possible contagion in the euro zone and China’s surprisingly weaker-than-expected trade balance data took center stage in risk sentiment yesterday.

But will the Greenback get lucky again today? At 12:30 pm GMT the U.S. will release its retail sales report, which is expected to tick higher than its January figures. Meanwhile, we’ll also see the business inventories and IBD/TIPP economic optimism reports at 2:00 pm GMT.

The currency bulls and bears will also be waiting for the highlight of the currency party today, which will start at 6:15 pm GMT when the Fed releases its FOMC statement. Market players are saying that the Fed will most likely emphasize the recent positive economic data from the U.S., so there will be less hints of a QE3. Do you think it will be positive for the dollar, or the high-yielding currencies? Stay glued to the tube on this report!

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And the dollar strikes again! Everything went the dollar’s way yesterday as strong retail sales data and optimism from the Fed combined to extend the dollar’s rally. Against the yen, it hit fresh highs as USD/JPYrose 72 pips to finish at a new 11-month high at 82.95. Meanwhile, EUR/USD extended its slide by another 71 pips to land at 1.3084. How long will this dollar rally last?!

Market conditions couldn’t have been more conducive for a dollar rally than they were yesterday!

For one, the dollar got a big boost from retail sales data, which showed an increase of 1.1% last month. This marks biggest jump in the last five months and adds to the U.S.'s recent collection of positive reports!

In other news, the Fed pretty much gave the markets what it expected in the FOMC statement. While the boys of the central bank noted improvements in consumer and business spending, they did refrain from sounding overly optimistic.

They added that they still expect rates to stay low until late 2014 and that they plan to maintain their bond purchase program. In other words, they’re holding their ground and aren’t making any major changes to monetary policy… yet!

Market conditions seem to be favoring the dollar at the moment, and so it’s likely that bullish momentum may carry it higher today. However, there are a few tier 2 reports due today that you may want to keep an eye on.

First up at 12:30 pm GMT is the current account balance. Survey says that most are expecting the U.S.'s deficit to widen from 110 billion USD to 114 billion USD. At the same time, import prices data will be due. Look for this report to print an increase of 0.6%, up from 0.3% in January.

Then at 2:00 pm GMT, Fed head Ben Bernanke will deliver a few words at the Independent Community Bankers of America National Convention. Will he have any important remarks to add to yesterday’s FOMC statement? Find out for yourself, homeboys!

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Ready to head up to the club? The scrilla’s buying! And why not? It just posted impressive gains versus the euro, Australian dollar, and the yen. Can the dollar continue to dominate? Or will the party be coming to an end soon?

Even the release of slightly worse-than-expected current account figures and some bearish statement from Fed President Ben Bernanke failed to stop the dollar’s rally yesterday.

The current account showed a deficit of 124 billion USD, which was slightly higher than the projected 114 billion USD deficit.

Meanwhile, in his speech to the banking community, Bernanke described the U.S.’s economy as “slow “. He did however, indicate that community bank performance was improving, as profits were rising, loan loss provisions were falling, and that the banks were maintaining strong capital ratios.

Remember, community banks are a primary source of funds for mom-and-pops stores, and play a crucial role in stimulating the economy. If they are performing well, then there will be less of a need to inject more stimulus into the economy.

We could be in for another active New York session, as we have a whole round of economic data on tap.

First up we’ve got the producer price index, weekly unemployment claims, and the Empire State manufacturing index coming in at 12:30 am GMT.

Producers are expected to have paid 0.5% more for their raw materials last month. Take note that producers normally pass on additional costs to customers, so this could indicate a rise in prices down the line.

Meanwhile, the labor market could be in for another positive set of data, as jobless claims are projected to have fallen to 357,000, down from 362,000 the week before. Claims have been trending lower recently, which means that less people are lining up for unemployment benefits.

The Empire State manufacturing index however, is seen to dip from last month’s reading of 19.5 to 17.6. Take note that the index actually printed better-than-expected in its last three releases, so don’t be surprised if the same happens today.

Later on in the day, TIC long-term purchases and the Philly Fed manufacturing index will be available at 1:00 pm and 2:00 pm GMT respectively.

Net purchases of U.S. dollar-denominated financial assets is expected to come in at 29.3 billion USD for last January. Keep in mind that in order for foreigners to purchase U.S. assets, they first need to purchase some Benjamins. If this report comes in much better-than-expected, it could give the dollar a nice little boost.

Lastly, the Philadelphia manufacturing index is estimated to have improved from last month’s reading of 10.2 to 11.9. We’ve been seeing mixed reading from this report lately, so keep an eye on today’s release, as it could set the tone for risk sentiment today.

Phew that was a long one folks! Good luck trading today!

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The Greenback just couldn’t keep up its winning streak yesterday as it returned most of its recent gains to its major counterparts. EUR/USD managed to close nearly 50 pips up from its 1.3033 open price while GBP/USD landed 11 pips above the 1.5700 handle. Will the Greenback continue its slide until the end of the week?

Risk appetite popped its head back in the markets yesterday as the U.S. printed better than expected economic data. Well, mostly. Only its PPI figure missed expectations as it showed a 0.4% uptick in producer price levels for February instead of the estimated 0.5% increase. The core PPI, on the other hand, came in line with consensus and showed a 0.2% rise.

As for the strong data, the U.S. jobless claims report showed a 351K increase in first-time claimants for the past week, slightly less than the predicted 357K and the other week’s 365K figure. Of course, several market participants took this as a sign that the U.S. jobs market continues to improve and that we might be in for another positive NFP report for March.

A couple of manufacturing indices also came in stronger than expected for March, as the Empire State manufacturing index jumped from 19.5 to 20.2 instead of slumping to 17.6 while the Philly Fed index rose from 10.2 to 12.5. A quick look at the old data tells me that this is the fastest pace of increase in manufacturing activity since June 2010!

For today, the U.S. still has a few top-tier and medium-impact reports on tap so y’all still have a chance to trade the news before the week comes to a close! The headline and core CPI for February are set for release 12:30 pm GMT and, judging from the results of the PPI report, we might see the CPI figures come closely in line with expectations as well. Core CPI is expected to be up by 0.2% for the month while the headline CPI could post a 0.4% increase.

Also due today are the capacity utilization rate and industrial production data. Capacity utilization is expected to be at 78.9% for February, slightly higher than the 78.5% reading for January, while the industrial production report could show a 0.4% increase. Stay tuned for the release at 1:15 pm GMT.

Last but not least, the University of Michigan consumer sentiment figure is due 1:55 pm GMT and this could print another improvement in consumer confidence for this month. Analysts expect the reading to climb from 75.3 to 75.8 this March, but if the actual figure beats expectations, we might be in for another risk rally!

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That wasn’t exactly how the dollar wanted to cap the week! With risk appetite in full swing, the scrilla took an old school, back-alley beating. EUR/USD rose nearly 100 pips to finish at 1.3175, while AUD/USD gained 64 pips to end at 1.0590.

Friday’s data didn’t help much either, as we saw economic data paint the town red.

Core CPI printed just a 0.1% increase in prices, which was less than the anticipated 0.2% uptick. Keep in mind that the Fed has been adamant that it plans to keep rates low for the time being. Lower-than-anticipated inflation just gives them more reason to do so.

Industrial production and the preliminary University of Michigan consumer sentiment index also disappointed. Industrial production showed no growth last month, after it had posted growth of 0.4% in January.

Meanwhile, consumer sentiment fell from 75.3 to just 74.3. Apparently, the sharp increase in black crack is taking its toll on discretionary income, causing some consumers to worry.

For today we’ve got the budget balance on tap at 6:00 pm GMT. Word on the street is that Fed posted a deficit of 231.7 billion USD last February. This shouldn’t be too much of a surprise – the government has been running monthly deficits for the past four years. With that said, I don’t expect it to affect trading too much.

We should be in for some wild action tomorrow though, as we’ve got retail sales figures and the FOMC statement on deck. Make sure to check my roundup tomorrow for more details on these two high-impact reports!