Daily Economic Commentary: United States

Trading Discussion News and Economy
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Make that ELEVEN in a row for the scrilla! With risk aversion still weighing down the markets, the dollar scraped ahead of its major counterparts, with the USDX finishing 19 pips higher at 1.92. Can the Greenback go for an even dozen?

The dollar continued to dominate the forex arena as risk aversion stemming from Greece continues to take its toll on the markets. With another election coming up in June, the dollar could be firmer over the next couple of weeks as traders unload their positions in higher yielding assets.

In other news, U.S. data was a ton better yesterday than it has been in recent weeks.

Building permits and housing starts both came in at an annualized pace of 720,000, which was close to the respective figures of 690,000 and 730,000. Meanwhile, industrial production ticked higher by 1.1%, after it was projected to increase by just 0.6%. This was also a nice change of pace from the previous month, when production dipped by 0.6%.

Looking ahead, we’ve got a couple of high-tier reports lined up for Uncle Sam today.

Weekly jobless claims numbers are due at 12:30 pm GMT, with expectations being that claims fell from the previous week’s figure of 367,000 down to 365,000.

Later on at 2:00 pm GMT, the Philly Fed Manufacturing Index is projected to print a reading of 10.0, which would be marginally better than last month’s score of 8.5. This would indicate that manufacturing conditions in the Philadelphia area are improving.

If these figures come in as hot as a Giselle Bundgen magazine cover (she still got it don’t she?), it may boost risk appetite, which may cause the dollar to give back some of its gains.

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The Greenback’s domination came to screeching halt yesterday as the U.S. dollar index formed an almost-perfect doji in its daily chart. The U.S. dollar index began the day at 81.92, fell during the Asian session to 81.72, rallied strongly during the European session to 82.15, and then dropped again to close the day barely changed at 81.91.

Data from the U.S. was mixed. The unemployment claims barely missed forecast as it showed that 370,000 claimed for jobless insurance instead of 368,000. The Philadelphia Fed Manufacturing index, on the other hand, fell much more than expectations. It printed a reading of -5.8, which was opposite the 10.3 the market had initially predicted.

Today, the only major event scheduled for the U.S. is the G8 summit. The G8 summit is attended by important finance officials and central bankers from the world’s largest economies. While not always the case, the G8 summit could provide us with clues of what the participants are planning to do next with regards to the economic and monetary policy.

For instance, they could talk about Greece’s political problems, which could positively or negatively affect market sentiment. Let’s wait and see how the meetings pan out!

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Technical traders must be patting themselves on the back for spotting the sweet doji on the dollar index! After rising for 14 consecutive trading sessions and staging the strongest rally since 1985, the Greenback finally pared its losses against its major counterparts. Here are the details.

The dollar index dropped from 81.915 to 81.578 last Friday, while EUR/USD rose by 62 pips from its 1.2642 intraday low. Even USD/CHF and USD/JPY showed the scrilla’s weakness, with the former slipping by 54 pips and the latter clocking in a 17-pip decline. Talk about getting a roundhouse kick!

No economic data was released from Uncle Sam last Friday, so the dollar traded on risk sentiment once again. Unfortunately for the Greenback, its notably overbought conditions made it vulnerable to profit-taking ahead of the G8 meeting.

The question is, did we just see a slight pullback, or a we looking at a longer-term reversal? Economic reports are light in the U.S. this week with only the existing home sales data tomorrow at 2:00 pm GMT; new home sales report on Wednesday at 2:00 pm GMT, and durable goods orders and initial jobless claims data on Thursday at 12:30 pm GMT scheduled for release.

It might be best to keep an eye out for risk sentiment for the rest of the week as the low-yielding Greenback usually benefits from flight to safe-havens. Oh, and make sure you got your stop losses in place when you trade, will ya?

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It looks like the dollar had the Monday blues yesterday. With the market’s newfound appetite for risk, the currency was shrugged off as traders sought higher-yielding currencies. EUR/USD ended Monday’s trading 33 pips higher while AUD/USD closed 79 pips above its opening price at .9916.

There really weren’t any positive developments that occurred in Europe over the weekend. However, it would seem that no news is good news for investors.

With that said, market analysts warn that we could see higher-yielding currencies trade lower as soon as markets get a fresh reminder that a Grexit from the euro zone poses a handful of risks to the global economy.

So be sure you’re on your toes for updates from Europe, ayt?

Also, be sure to keep tabs on the data we have scheduled from the U.S. today as they could help (or harm) the currency’s performance on the charts.

At 2:00 pm GMT, the existing home sales report for April is seen to print at 4.62 million while the Richmond manufacturing index is eyed at 12.

Keep in mind that better-than-expected figures may boost the dollar if fundamentals come into play. However, if markets move based on sentiment, we could see the dollar get sold-off following positive data as improving economic conditions in the U.S. could spark risk appetite. Good luck!

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Who’s the king of the hill? The Greenback is! The scrilla snatched back its throne in the charts yesterday after risk aversion sent traders back to the safe-havens. EUR/USD plummeted to 1.2680, while USD/JPY rocketed by 67 pips to 79.97. Boo yeah!

Worries about Greece and Spain put pressure on high-yielding currencies during the London session yesterday. As it turned out, traders weren’t as optimistic about the upcoming European leaders’ meeting as they were a couple of trading sessions ago.

For one, EU President Van Rompuy, the host of the event, hinting that there will be no policy decisions made this week. Not only that, but former Greek President Papademos also suggested that different Grexit scenarios are already being discussed by European officials. Lastly, credit rating agency Fitch’s decision to downgrade Japan from AA- to A+ made the dollar more attractive against the fellow low-yielding yen.

Of course, it also helped the dollar that U.S. economic reports came in with mixed results. Although the Richmond manufacturing index printed a reading of 4 in May against April’s 14 figure, the weakness is just in line with the disappointing Philly Fed index that we saw last week. Meanwhile, existing home sales rose for the first time in six months in April, which suggests that the housing industry is moving in the right direction.

Let’s see if the new home sales data out at 2:00 pm GMT will reflect the industry’s supposed strength. The report is expected to come in at 335K, but a stronger reading might boost the Greenback higher. Also due at 2:00 pm GMT is the house price index, which will be followed by the crude oil inventories at 2:30 pm GMT.

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The Greenback continued to rally against its major counterparts, excluding the Japanese yen, as risk aversion extended its stay in the markets. EUR/USD fell to a new low of 1.2545 before closing at 1.2601 while GBP/USD slipped to the 1.5700 handle. Will we see more safe-haven rallies today?

Better than expected U.S. economic data, combined with risk aversion, boosted the Greenback in yesterday’s trading. New home sales came in stronger than the estimated 335K and landed at 343K for April while the figure for March was revised upwards to 332K. Could this mean that the recovery in the U.S. housing sector is finally gaining traction? Only time will tell, my friends!

Today, the U.S. is set to release its durable goods orders data at 12:30 pm GMT. The headline figure is predicted to show a 0.5% uptick while the core figure could print a 1.1% jump for April. Also due today is the usual weekly jobless claims release, which is expected to report a 372K increase in first-time claimants.

Bear in mind that strong U.S. data could give the Greenback an additional boost, as it is already being supported by safe-haven flows spurred by the mess in the euro zone. Stay tuned for my updates!

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When risk aversion is in play, you can almost always be sure that the dollar will kick butt on the charts. In yesterday’s trading, Europe’s debt woes continued to dominate market headlines and highlighted the dollar’s safe haven status.

EUR/USD dropped to its 22-month low at 1.2516 before closing the day 70 pips below its opening price at 1.2532. Meanwhile, USD/CHF rallied to its 15-month high at .9596 before closing the day at .9585 with a 53-pip gain.

Aside from risk aversion, it also helped that economic data from the U.S. came in somewhat better than expected.

The unemployment claims for last week was lower by 2,000 than the forecast and its prior reading at 370,000. This translated to a 5,500 drop in four-week moving average for jobless claims to 370,000. Consequently, this got a few market junkies excited that the NFP report for May could top expectations.

The disappointing durable goods report for April also did not dampen the mood of investors. While the headline figure came in at 0.2% (versus the 0.5% forecast) and the core reading was at -0.6% (versus the 1.1% forecast), a few analysts say that the figures are already better compared to the sharp decline that we saw for March.

For today, you’d probably want to keep an ear out for updates from Europe if you plan on trading the dollar as our forex calendar is blank for high-caliber reports from the U.S. Only the revised University of Michigan consumer sentiment index is due today at 1:55 pm GMT and it is eyed at 77.7.

Keep in mind that the dollar usually rallies on risk aversion but doesn’t do so well when risk appetite is in play. Good luck!

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U.S. markets are closed today in commemoration of Memorial Day, but that doesn’t mean the Greenback would be in for a lazy day. The dollar gapped lower against most of its major counterparts over the weekend, suggesting that traders could be gearing up for something big. What could it possibly be?

I’m guessing traders are preparing themselves for the May NFP release! We all know how exciting that economic event can be, don’t we? Of course that’s due at the end of the week, and there are still a few top-tier U.S. data that we should keep an eye out for over the next few days.

First up is the CB consumer confidence release due tomorrow, which is expected to show a slight improvement from 69.2 to 69.6 in May. Then, Wednesday has the pending home sales report on tap while Thursday has the ADP non-farm employment change, weekly jobless claims, and preliminary GDP reports due. Last but certainly not least is the NFP release on Friday, accompanied by the ISM manufacturing PMI.

Pretty exciting week, don’t you think? Better mark your calendars and stay tuned to my daily economic commentaries to know what to expect for these red flags!

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As the saying goes, “you win some, you lose some!” The dollar got a taste of both victory and defeat yesterday as it marked gains against the euro but edged lower against the yen. What’s in store for it today?

Though the U.S. and several European markets were closed in celebration of bank holidays yesterday, there was no shortage of action on the charts. But as traders return from their three-day weekends, what can we expect?

Well for one, we could see heightened volatility and strong breakouts as they reenter positions and jump back into the markets. But dollar price action will likely depend on risk sentiment and today’s U.S. reports.

First up, at 1:00 pm GMT, is the S&P/CS Composite-20 HPI, which most believe will show a 2.7% decline following the previous month’s 3.5% decrease. An hour after that, we’ll take a look at the CB consumer confidence index, which is slated to rise from 69.2 to 69.8.

Should these reports print highly positive figures, it might be enough to encourage a bit of risk taking and send the dollar down the charts.

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The dollar bulls are back in business! Thanks to risk aversion in markets, Greenback traders mostly ignored mixed economic data from the U.S. Instead, they boosted the safe-haven higher against its major counterparts. Read on to get the details!

As I mentioned in my EUR piece today, Spain’s credit rating downgrade hurt the euro and dragged EUR/USD down by 39 pips to 1.2499. Overall risk aversion also boosted USD/CHF by 25 pips, while Cable dropped by another 48 pips.

S&P’s house price index was mostly ignored by traders as it only showed a moderation in the pace of falling house prices. The data showed a 2.6% drop in March, which is only a bit slower than the 3.5% decline that we saw in February.

Meanwhile, concerns on the country’s employment and manufacturing prospects and the euro zone crisis dragged on CB consumer confidence. The report came in at a four-month low of 64.9 in May after showing a downwardly revised 68.7 reading in April.

Let’s see if the dollar gets more momentum today when the pending home sales data is released at 2:00 pm GMT. The report is expected to contradict the rise in existing home sales in April, but let’s hang on to our seats for any surprises!
You also might like to keep an eye out for risk sentiment as concerns in the euro zone heat up. Remember, the low-yielding dollar usually benefits on risk aversion, so make sure you keep tabs on any possible trade setup!

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“Safety first!” said the markets as they bought up the safe haven dollar in yesterday’s trading. The American currency chalked up ridiculous gains against its higher-yielding counterparts and took EUR/USD 130 pips lower to a new 2012 low.

U.S. pending home sales posted extremely disappointing results in April (-5.5% vs 0.0%), and on top of that, March’s 4.1% uptick was revised down to 3.8%. Still, the markets just couldn’t find the courage to ditch the dollar… not with risk aversion fueling demand for the Greenback!

Up ahead, we’ve got a doubleheader scheduled later in the New York session as the U.S. is set to publish ADP non farm employment data (12:15 pm GMT) and its preliminary GDP report (12:30 pm GMT). Survey says we’ll see an improvement in the ADP report as it’s slated to pick up from 119,000 to 145,000. Meanwhile, the GDP report is expected to show a downward revision to growth from 2.2% to 1.9%.

Watch out for wild swings when these major releases come out, fellas! These two could push the Fed one step closer to QE3 if they print highly disappointing results!

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The dollar got mixed feedback in trading yesterday as it lost ground against the yen, strengthened against the pound and Loonie, but finished practically unchanged against everything else. What the heck happened and what can we expect today?

Surprisingly enough, yesterday’s reports all bore the same news - BAD news, that is! The ADP non farm employment report fell below expectations and printed an increase in jobs of just 133,000 instead of 145,000.

Meanwhile, preliminary GDP data confirmed that the economy’s expansion was weaker than initially estimated in Q1 2012 as growth was revised down from 2.2% to just 1.9%. A big chunk of this downward revision came from an adjustment to consumer spending growth, which was downgraded from 2.9% to 2.7%.

Lastly, unemployment claims picked up last week, rising from 373,000 to 383,000 instead of falling to 369,000 as many economists had predicted!

But enough about yesterday’s reports. Let’s focus our eyes on what’s coming ahead!

At 12:30 pm GMT, the much-anticipated NFP report will come out, and survey says we’ll see jobs increase to the tune of 151,000, up from 115,000 in April. The unemployment rate, on the other hand, is expected to hold steady at 8.1%. For tips on what to expect, I suggest you check out Forex Gump’s guide to trading the NFP release! It’s a must-read for anyone planning to trade the dollar today!

After that, we have another major event in the release of the ISM manufacturing survey. The index is expected to slip from 54.8 to 54.0 in May, but if the actual results fail to meet forecasts, we could see a strong reaction in the markets.

Phew! Looks like today’s gonna be intense! Be careful out there, kiddos!

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Thanks to the disappointing NFP figures, the Greenback lost ground against most of its major counterparts last Friday. EUR/USD ended the day in the green as it closed 19 pips above the 1.2400 handle while USD/CHF closed at .9672. Will fundamentals take over and crush the Greenback in the coming days?

Before answering that question, let’s have a quick rundown of the recently released NFP data. As Forex Gump mentioned in his NFP preview, analysts were counting on a 151K increase in net hiring for the month of May. However, the actual data totally missed the mark and chalked up a mere 69K rise in employment. To make things much worse, the April figure was revised from 115K to 77K. That was enough to push their jobless rate up from 8.1% to 8.2% during the period.

But no, the bad news doesn’t end there! A few hours later, the U.S. went on to report a larger than expected drop in manufacturing activity as its ISM manufacturing PMI slipped from 54.8 to 53.5. The consensus was a decline only until 54.0 reading, but the actual result revealed that the expansion in the manufacturing industry weakened more than expected.

This week, the U.S. economic schedule has only a few red flags on tap. Keep your eyes peeled for the non-manufacturing version of the ISM report which is due on Tuesday and is expected to show an improvement. Thursday has the usual weekly jobless claims due, along with a speech by Fed head Ben Bernanke. Last but certainly not least is the trade balance scheduled on Friday 12:30 pm GMT.

For today, only the medium-tier factory orders report is due and this isn’t expected to have a huge impact on the Greenback’s movement. With that, the downbeat NFP release could continue to weigh on the Greenback unless euro zone debt woes continue to make a scene and fuel another safe-haven rally.

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Look out dollar bulls, it look as if the bears are waking up from their May hibernation! Just two trading days into June and it seems as if the markets are singing a different tune. EUR/USD rose for the second consecutive day to close 85 pips higher at 1.2498. Meanwhile, GBP/USD posted its first green candle in 10 days to finish at 1.5391, up 28 pips above its opening price.

Factory orders for April came up short of 0.3% expected increase, falling 0.6% instead. Furthermore, March’s figures were revised down to show a 2.1% decline. This indicates that production is falling and also marks the first time in 9 months that orders have dropped in back-to-back months.

We could be in for another wild New York session today at the ISM non-manufacturing PMI report will be released at 2:00 pm GMT. Word on the street is that the index remained steady and will post a reading of 53.6. However, I just wanna point out that the last two releases came in worse-than-expected, so it’s very possible we could see the same happen today. If that happens, it could mean another round of pain for the dollar!

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And just when we thought it was the bears’ turn to hustle, dollar bulls started to charge! The dollar ended the day higher against all of its counterparts save for the Aussie. USD/JPY closed the day 38 pips above its opening price at 78.75. Meanwhile, EUR/USD was down by 46 pips at 1.2452 by the end of the day.

Once again, it was good ol’ risk aversion that spurred demand for the Greenback as concerns from the euro zone remain elevated. Of course, it also helped that the ISM non-manufacturing PMI topped expectations.

After the horrible NFP report released last Friday, I don’t think a lot of market junkies anticipated the report to come in higher than what was expected. It came in at 53.7 versus the 53.6 forecast.

Our forex calendar doesn’t have any economic data on tap from the U.S. today. However, we do have the Beige Book which is due to be released at 6:00 pm GMT. If you’re looking to trade the dollar, be sure you tune in to the report and pay attention to what the FOMC members’ outlook for monetary policy. Keep in mind that hawkish remarks is usually bullish for the dollar while dovish comments are bearish.

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The dollar took some big hits on the charts yesterday as Fed officials signaled more willingness to ease monetary policy. In response, the markets began shedding dollars, sending EUR/USD up 124 pips and GBP/USD up 121 pips. Is this the big reversal that dollar bears have been waiting so long for?

Surprisingly enough, it wasn’t U.S. reports that did the dollar in, but comments from Fed officials themselves! According to Dennis Lockhart, who is a voting member of the FOMC, the option to extend the Fed’s Operation Twist program is still “on the table.”

Meanwhile, Federal Reserve Bank of San Francisco President John Williams said the central bank has got to prepare itself to do more “if needed to best achieve its statutory goals of maximum employment and price stability.” Hmm… I can’t help but wonder if these cautious words are the Fed’s way of managing the markets’ expectations!

In any case, I’m excited to see if the Fed will maintain a consistent tone later in the day as the big boss himself, Fed Chairman Ben Bernanke, is set to speak at 2:00 pm GMT. If he hints at more easing, it could spell big losses for the dollar, so listen closely, homies!

Also, we have the weekly unemployment claims report coming out at 12:30 pm GMT. Look for it to tick down from 383,000 to 381,000.

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Big Ben’s not-so-dovish remarks allowed the dollar to get big boy bites of pips from its counterparts yesterday. EUR/USD ended the day 13 pips below its opening price at 1.2565. Meanwhile, USD/JPY was up 34 pips at 79.60 by the day’s close.

After the horrible NFP report last Friday, a lot of market junkies expected the Fed’s head honcho to drop hints about the economy needing more stimulus. However, contrary to that, Ben Bernanke downplayed the disappointing labor figures and said that the deterioration in the jobs market could only be because of seasonal factors and the unusually warm weather.

It’s not often that we hear the Fed Chairman optimistic about the economy. With that said, I have a feeling that the bullish effect of his remarks on the dollar could carry on in today’s trading. But of course, that is merely this old man’s humble opinion.

Be sure you keep tabs on updates from the euro zone as news from the region could dictate price action. Also, don’t miss the U.S. trade balance report due later at 12:30 GMT. A trade deficit of 49.4 billion USD is expected. A better-than-expected figure could help spur the dollar. Good luck!

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The dollar proved to be the champ of the forex market last Friday, thanks to risk aversion. The U.S. Dollar Index, which tracks the performance of the Greenback versus other major currencies, closed Friday at 82.98, 0.26 points higher than its opening level.

Apparently, the market was sorely disappointed as the three major banks—the ECB, BOE, and the Fed—didn’t make any moves with regards to providing more liquidity to the economy. The clear message was that the global economy must navigate through its problems without central bank support.

Moreover, Fitch, a major global credit rating agency, decided to lower Spain’s credit rating by three notches. This puts Spain’s investment grade status to junk.

On the economic front, the U.S. trade balance failed to meet forecast. It came in with a 50.1 billion USD deficit, slightly higher than the 49.4 billion USD deficits initially expected. At the same time, the previous month’s deficit was revised higher to 52.6 billion USD from 51.8 billion USD.

This week is a heavy week in terms of data as a number of high profile economic reports are scheduled to come out.

On Wednesday, the U.S. producer price index and retail sales report are due. The Headline PPI is anticipated to decline 0.6% while the retail sales report is slated to show a decrease 0.1%.

On Thursday, the initial jobless claims and core CPI are both coming out. The initial jobless claims is predicted to show that 378,000 people claimed for unemployment insurance while the core CPI is projected to decline 0.2%.

On Friday, there’s the Preliminary University of Michigan consumer sentiment survey. The consensus is a reading of 77.5, which is slightly lower than the previous month’s 79.3.

As you can see, there are a lot of important events lined up this week. Be sure to keep a close eye on the results as they could have strong effects on the dollar’s price action.

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Now that’s how you start the week off right! Dollar pairs filled their weekend gaps as risk aversion helped the scrilla zip past its major counterparts. Will the Monday mayhem continue or will the Greenback be thunderstruck this Tuesday?

It seems that not everyone is too hyped up about the Spanish bailout. Make sure you hit up my euro zone commentary for the 411 on what’s happening over in Spain!

No hard data released yesterday, although we did get some revealing comments from some FOMC members. Dennis Lockhart said that we should see a slow and moderate recovery as the jobs market continues to suffer, while Sandra Pianalto said that Europe’s problems are a serious threat to slow down overall economic activity.

Take note that both Lockhart and Pianalto are part of the voting crew over at the Fed, so we should take their comments seriously. Based on their comments, it seems as if the two could be open to more quantitative easing measures.

Once again, no hard data headed our way that could pose a threat to the dollar’s nice start to the week. Still, keep an eye out for risk sentiment as you never know what may tip the balance one way or the other!

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The dollar was weaker across the board against other major currencies yesterday as risk aversion tempered. There was no single event that triggered the movement though, as the Greek elections or the Spanish bailout still hasn’t pushed through. The U.S. dollar index, which tracks the performance of the Greenback versus a basket of other currencies, fell to 82.88 from its opening level at 83.07.

No major data was released yesterday, but today, we’ve got a couple of high profile reports on deck. At 12:30 pm GMT, the U.S. producer price index will be published. The index is expected to show a 0.6% decline, a little worse than the previous month’s 0.2% decrease. The core version of the report, on the other hand, is slated to show a 0.2% rise.

The retail sales report will also be released at the same time. The market expects it to show a 0.1% drop in sales. However, the core version, which excludes automobile sales, is predicted to show a 0.1% increase.

Don’t miss these reports later, as they will surely have a strong impact on price action! You can also check out Forex Gump’s latest blog post to see how you could possibly take advantage of the volatility the retail sales report produces!