Daily Economic Commentary: United States

Trading Discussion News and Economy
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Ahhh, can you taste that dollar bulls? It’s the sweet taste of victory! Thanks to a slightly disappointing German bund auction and some negative comments from financial officials, the safe haven Greenback was able to rally yesterday. The U.S. dollar index, which gauges the overall strength of the currency, extended its gains to 82.85 from 82.77.

According to news reports, Germany was expecting to sell around 4 billion EUR worth of 10-year bunds but was only found demand for 3.4 billion EUR. In addition, yields also rose to 1.42% from 1.31%. Meanwhile, the German party CDU indicated that it was against the backing of more financial aid to Greece.

Today, no major news reports are lined up as only the U.S. trade balance and the usual weekly unemployment claims report are due. The trade balance is predicted to come in with a 47.4 billion USD deficit while the weekly unemployment claims is slated to show that 371,000 people claimed for jobless insurance. The actual figures will be released at 12:30 pm GMT today.

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The Greenback showed some muscle again yesterday after economic data from the country showed an improvement in both the trade deficit and the jobless claims. The currency found itself higher versus other major currencies such as the euro, the pound, and the franc.

According to the trade balance, the U.S. deficit has fallen to 42.9 billion USD from 47.4 billion USD. Meanwhile, the initial jobless claims report has showed that the number of peopel that availed of unemployment insurance ticked lower to 361,000 from 371,000 the week before.

No major news report scheduled to be published from the U.S. today but many analysts are saying that the Greenback has probably bottomed out against the euro and is going to head higher. If bad news from the euro zone comes out, this may very well be the case.

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Surprise, surprise! Guess who was at the bottom of the dog pile last Friday? That’s right, the mighty dollar! It weakened against almost all of its major counterparts. Can it stage a comeback this week?

Surprisingly enough, the dollar couldn’t help but slide down the charts even after China released trade balance data that was much worse than expected. Though this reignited fears of a global economic slowdown, it didn’t really do enough to spark a full-on bout of risk aversion.

As a consolation, the dollar was able to hold its ground against the euro (one of last Friday’s weakest currencies), which was still taking a beating from the markets’ waning hope for support from the ECB.

As for staging a comeback this week, it looks like the dollar is already has already begun to make its move as it’s off to a strong start against its counterparts. But will its rally last?

The answer to that question might depend on the results of the reports the U.S. is due to release this week. We won’t have anything on tap today, but the economic calendar is packed for the rest of the week!

Tomorrow, we’ll kick off with retail sales data (seen at 0.4% up from -0.5%) and the PPI (expected at 0.3% up from 0.1%). Then on Wednesday, we’ll take a look at the CPI, which is supposed to show a 0.2% increase in prices, up from 0.0% the previous month.

Thursday then picks up with building permits (forecasted at .77 million from .76 million) and the Philly Fed manufacturing index (to improve to -4.3 from -12.9). And to cap off our week on Friday, we have the prelim University of Michigan consumer sentiment index (predicted to improve to 72.5 from 72.3).

Phew! With such an action-packed week ahead of us, y’all better be prepared for a crazy week of trading! Make it a habit to read my Daily Forex Fundamentals and Big Pippin’s Daily Chart Art to keep yourself updated with the latest developments!

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With no major data out from the U.S., the Greenback’s price action was as mixed as the performers in the closing ceremony of the Olympics. USD/CHF ended up with a 36-pip fall, but USD/JPY clocked in an 8-pip rise. What gives?

Well, it seems that traders were waiting by the sidelines until the U.S. releases its major news reports like the retail sales data coming up at 12:30 pm GMT today. Word on the streets is that investors are expecting a higher figure this time around thanks to higher consumer and oil prices.

The PPI report is also scheduled at 12:30 pm GMT today, but like the retail sales data, it isn’t really expected to make an impact on the Fed’s decision to pull the QE3 trigger. The central bank has its eyes on the employment numbers, you see. So unless these reports badly miss its growth forecasts, we might not see much movement on the Greenback pairs.

If you want to try your hand at news trading though, you can also practice your skills on business inventories and IBD/TIPP economic optimism report at 2:00 am GMT. Both reports are expected to print a bit higher than their previous figures, but keep an eye out for any surprises!

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Well, well, well… Look who decided to respond to fundies! Following the release of upbeat retail sales data, the dollar shimmied up the charts to record solid wins against its major counterparts. EUR/USD slid from its high of 1.2387 to end the day 12 pips lower at 1.2325. Meanwhile, USD/JPY rose 38 pips to finish at 78.73.

July’s retail sales report printed a huge upside surprise yesterday, showing a 0.8% increase in headline spending, which is almost triple the figure that many had predicted. Likewise, the core figure showed a 0.8% surge in sales, undoing the previous month’s 0.8% decline and surpassing forecasts which called for a 0.4% rise.

These numbers, in turn, led to a spike in the demand for the dollar. If you think about it, homies, it’s actually been a while since we last saw the dollar respond to fundamentals. Why now?

Well, one reason could be because the Fed hinted at its last FOMC statement that its future policy moves will depend highly on employment data and developments in the euro zone. And guess what? The latest NFP report came in much better than expected and we haven’t heard any new (major) bad news from Europe! So as of now, it seems that QE3 isn’t really needed… yet!

Today, we have another red flag on the calendar in the form of the U.S. CPI. It’s expected to show a 0.2% rise in prices, up from 0.0% the previous month. The core CPI report, meanwhile, is anticipated to print another 0.2% increase in prices. Also, the Empire State Manufacturing index is slated to tick down from 7.4 to 6.6. These reports will all be available at 12:30 pm GMT.

After that, TIC long-term purchases data will be released. Look for the report to show a decrease from 55.0 billion UDS to 41.5 billion USD in June.

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Topsy-turvy day for the scrilla, as it was simply all over the place. The dollar lost to the Canadian dollar for the 8[SUP]th[/SUP] time in the past 9 days, but managed to edge slightly higher versus the euro and yen.

The results of the Empire State Manufacturing Index may have put a damper on all the optimism created from the previous day’s retail sales report. The index came in much worse than expected, printing at -5.9, after it was projected to show a reading of 6.6. This indicates worsening economic conditions in the New York state area.

The TIC long-term purchases figures were also much lower than originally predicted, as purchases fell from 55.9 billion USD in to just 9.3 billion USD this past June. This means that less foreigners are purchasing dollar-denominated financial assets. Could it be that investors are diversifying away from the dollar?

Lastly, a report showed that inflation remains on the down low, as the headline and core CPIs came in at 0.0% and 0.1% respectively. Expectations were that both would print at 0.2%. With inflation subdued, this gives the Fed more room to dump more dollars into the economy if it ever decides to go ahead with QE3.
For today, we’ve got another round of red-flags headed our way starting at 12:30 pm GMT.

The annualized rate of building permits is projected to have risen slightly from 760,000 to 770,000 this past July. Meanwhile, the annualized pace of housing starts is expected to remain steady at 760,000. Take note that recent data have indicated signs of life for the housing market, so be on the lookout for any positive surprises.

Later on at 2:00 pm GMT, the Philly Fed Manufacturing Index is due. Word on the street is that while the Philadelphia manufacturing sector still experienced worsening conditions last month, it has improved slightly, as reflected by the increase in the index from -12.9 to -4.7. Given how the Empire State version came in much lower than projected, another poor figure in today’s report may trigger risk aversion in the markets.

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Tough day in the office for the Greenback yesterday! The U.S. dollar lost ground to most of its major counterparts except for the Japanese yen as mixed U.S. data dampened demand for the safe-haven currency. Will it have a chance to make up for its losses today?

U.S. building permits came in stronger than expected for July as the figure climbed from 0.76M to 0.81M during the month. Housing starts, on the other hand, were just in line with expectations of a 0.75M reading. Last but certainly not least were the weekly jobless claims which missed the consensus and posted a 366K increase in first-time claimants for the previous week.

Today, the U.S. is set to print its preliminary consumer sentiment figure from the University of Michigan. The reading is expected to climb from 72.3 to 72.5 for this month, reflecting a slight improvement in consumer confidence. If the actual figure comes in higher than expected, we could see the U.S. dollar recover from yesterday’s selloff. Otherwise, weaker than expected results could mean more losses for the Greenback. Make sure you keep an eye out for this release at 1:55 pm GMT!

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Thanks to the mildly positive consumer sentiment survey, the dollar capped off the week on a good note. The dollar index rose to 83.03 from 82.88 as it posted gains versus other major currencies like the pound, the euro, and the commodity-based currencies.

The University of Michigan consumer sentiment survey showed that confidence unexpectedly rose in August. The survey printed a reading of 73.6 from 72.3 the prior month. It suggests that we could see household consumption increase for this quarter.

This week, we’ve got a couple of red flags on the U.S. economic calendar.

On Wednesday, we’ll see the existing home sales report. It comes out at 2:00 pm GMT and it is expected to show 4.52 million in sales. The FOMC meeting minutes will also be released. It’ll publish at 6:00 pm GMT.

Then on Thursday, there’s new home sales report and the weekly initial jobless claims. They are slated to show 362,000 and 365,000, respectively. And finally, on Friday, the durable goods orders report is due. It’s projected to show a 0.5% gain.

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With no hard data released yesterday, dollar pairs were pretty much unchanged yesterday. USD/CHF and EUR/USD closed near their opening prices, while the comdolls edged just slightly higher. Will we see more action in today’s matchups?

Based on our economic calendar… probably not, as we’ve got no hard data lined up from Uncle Sam today. Just be informed that FOMC member Dennis Lockhart will be speaking at an economic forum and will discuss his outlook on the U.S. economy. If he expresses a dovish tone, it could mean that he’s leaning towards the QE3 camp and this could trigger some volatility in the markets. Watch out!

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You wanted action? Well, you certainly got it! The dollar was abandoned aggressively yesterday as optimism in the euro zone sparked a strong bout of risk taking. As a result, EUR/USD found itself 115 pips higher at the end of the day, while USD/JPY ended 16 pips lower.

The main reason behind the dollar’s weakness was speculation that the ECB will soon cook up a plan to temper the region’s high bond yields. Some say the central bank may set a cap on these yields, while others think it could load up its bond purchases. In any case, these rumors were enough to get traders to ditch the dollar in favor of the euro and even the yen.

On the domestic front, the only bit of news we got was from Fed member Lockhart, who practically killed hopes of more stimulus. He pointed out the recent “firm” economic reports that the U.S. has been rolling out while saying that he sees potential for “more appetite for risk.” But more importantly, he added that deflation ain’t a concern at the moment! Looks like the Fed is stepping further and further away from QE3!

Today, existing home sales data will be available, and forecasts say that we’ll see an improvement from 4.37 million to 4.52 million. If you’re interested in trading this release, catch it at 2:00 pm GMT.

After that, we’ll take a look at the latest FOMC meeting minutes, which could give us valuable insight as to what the Fed plans to do next. Are other policymakers as hawkish as Lockhart? Find out at 6:00 pm GMT?

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The dollar got its butt kicked yesterday just like Jean-Claude Van Damme did in The Expendables 2. EUR/USD finished the day 54 pips above its opening price at 1.2522 while GBP/USD closed with a 91-pip gain at 1.5867. On the other hand, USD/JPY was 70 pips lower from its opening price at 78.54.

So why did the dollar get whooped in yesterday’s trading?

Contrary to what most market junkies were expecting, the FOMC meeting minutes showed that the Fed is eager on providing the economy with more stimulus. The Fed said in its statement that “substantial and sustainable” signs of economic growth are absent. And so, further monetary policy easing may be “warranted fairly soon.”

Of course, those remarks gave dollar bears enough piptorade to hustle some muscle. Some market junkies say that we could see the central bank take more action as early as September!

Since the minutes gave markets a clear indication on the Fed’s stance regarding further easing, after being vague about it in the past few months, it may likely continue to dictate price action in today’s trading. I doubt that traders will be quick to forget the dovishness.

However, who knows, perhaps the dollar could pare some of its gains should updates come out from the euro zone and spark risk aversion. Or maybe the dollar could find some support on the charts with the roster of economic reports we have on tap today.

The unemployment claims is due to come in at 12:30 pm GMT and it is eyed at 365,000. Then at 1:00 pm GMT, the U.S. flash manufacturing PMI for August is seen at 51.3. Last but not the least, new home sales for July is anticipated to print at 363,000.

Better-than-expected figures could help keep the dollar afloat while worse-than-expected figures could send it lower as they would affirm the Fed’s eagerness for more stimulus. So watch out for

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The Greenback was generally weaker yesterday as the dovish FOMC meeting minutes continued to weigh down heavily on the currency. The U.S. dollar index which tracks the performance of the Greenback versus other major currencies fell for the fourth day in a row to 81.44.

Economic data released from the U.S. were mixed though. The weekly unemployment claims failed to meet forecast and rose from 368,000 to 372,000 instead of falling to 365,000. On the other hand, the new home sales came in better than expected at 372,000. The consensus was 363,000.

Today, the only red flag on the forex calendar is the durable goods orders report. The headline version is projected to show a 2.6% gain while the core version is predicted to only show a 0.5% increase. If the actual results turn out to be worse than forecast, it could lead to a sell-off in the Greenback. Any negative data could be seen by the market as another reason for the FOCM implement another round of monetary easing.

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Finally! After giving up pips to its counterparts one day after another, the dollar managed to pare some of its losses on Friday. EUR/USD closed the week at 1.2512, 50 pips below Friday’s opening price. Meanwhile, GBP/USD was down 56 pips for the day at 1.5804.

But don’t get too excited about the dollar’s gains from Friday, just yet! For one, the durable goods orders report for July printed mixed figures and gave investors very little reason to be bullish on the Greenback. Although the headline reading printed at 4.2% and topped expectations at 2.6%, the core figure showed a 0.4% decline and disappointed the 0.5% forecast.

Market junkies say that the dollar’s price action on Friday was nothing more than just profit-taking for traders who have had short-USD positions for the most part of the week. Boo!

Don’t worry though! We have a few top-tier reports from the U.S. this week which includes the preliminary GDP report for Q2 2012, pending home sales for July, and the Fed’s Beige Book. These reports would shed some light on the economy’s health and possibly paint a brighter picture for the U.S. If they come in better-than-expected, we may just see the dollar rally!

So make sure you check them out on our forex calendar and take note of their release, ayt?

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Amid the very light economic calendar in yesterday’s trading session, the Greenback was able to come out victorious. It edged higher against most major currencies, rallying 13 pips versus the euro, 22 pips versus the pound, and 10 pips versus the yen. Can the Greenback continue its streak?

As I mentioned, there was an absence of economic events yesterday as the U.S. didn’t release any economic data. Today, however, there are two important news lined up.

At 1:00 pm GMT, the S&P/Case-Schiller Composite-20 House Price Index will be published. It’s expected to show that the average selling price of homes declined 0.3% in June. In May, the HPI recorded a 0.7% decrease.

At 2:00 pm GMT, the CB Consumer Confidence survey will come out. It’s slated to print a reading of 65.8, which is tick lower than the previous month’s 65.9. Given how fundamentals have been driving the Greenback’s price action recently, better-than-expected figures could help the currency maintain its rally.

Let’s see how these reports will affect the market today!

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Not today, boys! The dollar bulls weren’t strong enough to outmuscle the bears yesterday as traders priced in a QE3 announcement from the Fed. Heck, the Greenback fell against the euro, pound, yen, and even the franc! Does this mean that QE3 is a done deal?

Not necessarily. While some analysts say that the lack of ECB and SNB participation in this weekend’s Jackson Hole meeting all point to a QE3 announcement from Big Ben, some market players still think that the Fed head will wait for the NFP report coming up on September 7 before he announces anything QE3-related.

Economic reports from Uncle Sam weren’t any help either. The S&P house price index and the Richmond manufacturing might have exceeded investors’ expectations, but the CB consumer confidence ended up printing at its lowest level in 2012. For many market junkies, the mixed data won’t influence the Fed’s decision much.

Maybe the quarterly preliminary GDP report at 12:30 pm GMT will liven things up for the dollar bulls and bears. The data is expected to come in at 1.7% after clocking in at 1.5% last quarter. The pending home sales data at 2:00 pm GMT is scheduled to follow, with analysts placing their bets on a 1.1% increase against last month’s -1.4% reading.

Last but not the least, the Beige book report will be printed at 6:00 pm GMT. Since the data is a consolidation of the economic performance of each of the 12 Fed districts, market players will watch the release closely. Have conditions in the districts improved, or have they deteriorated enough to warrant a QE3? Stay glued to the tube for this one!

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It looks like better-than-expected data from the U.S. wowed investors on Wednesday and encouraged them to buy the dollar. Consequently, the Greenback ended yesterday’s trading in the green against most of its counterparts.

EUR/USD closed the day 38 pips below its opening price at 1.2530. Meanwhile, USD/JPY finished with a 17-pip win at 78.69.

The preliminary U.S. GDP report printed in line with expectations. It showed that the economy actually grew by 1.7% in Q2 2012 and not just by 1.5% as previously reported. Meanwhile, data on pending home sales topped expectations when it came in at 2.4% versus the 1.1% forecast.

What about the Beige Book, you ask?

The report didn’t really provide any clarity on the U.S. economy. While some Fed districts reported improvements in employment and consumer spending, there were those who said that the sluggish growth of the manufacturing sector is weighing down economic conditions.

To get more insight on the economy and what the Fed’s intentions are for future monetary policy, we just have to keep tabs on the Jackson Hole Symposium. Forex Gump wrote an article about what to expect from the event. You should check it out!

Also be on your toes for the reports we have scheduled for the dollar today. At 12:30 pm GMT, the jobless claims report will be on tap and it is eyed at 370,000. Along with it, the core PCE index is anticipated to come in at 0.1%. Keep in mind that it is widely perceived as the Fed’s preferred indicator for inflation. And so, the figure may just affect Ben Bernanke’s tone in this weekend’s symposium.

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Some of yesterday’s reports may have printed in the red, but that didn’t stop the dollar from staging a solid rally! Buoyed by pre-Bernanke speech expectations, it was in hot demand as traders unloaded their holdings of risk assets. As a result, the American currency gained against all of its major counterparts except for the yen.

You’d think the markets would at least think twice about buying the Greenback after seeing yesterday’s reports! After all, not only did jobless claims rise to 374,000 (forecasts called for 370,000) last week, but the previous week’s record was also revised up from 372,000 to 374,000.

Meanwhile, the core PCE price index registered a 0.0% change in prices last month, which is slightly lower than the 0.1% that most analysts had predicted.

It seems the only positive bit of data that we got was the personal spending report. It printed a growth of 0.4% as expected, which just so happens to indicate the first increase in consumer spending in 3 months.

But enough about that, let’s talk about what could happen later on!

The U.S. is set to publish the Chicago PMI (expected to fall from 53.7 to 53.6) at 1:45 pm GMT and the revised UoM consumer sentiment report (expected to rise from 73.6 to 73.7) at 1:55 pm GMT. But no doubt, the highlight of the day will be Ben Bernanke’s speech at the Jackson Hole Symposium, scheduled at 2:00 pm GMT.

From the looks of it, many economists are anticipating disappointing words from the Fed head. And it makes sense! It seems unlikely that the Fed will commit to more easing without completing its economic forecasts. After all, policymakers wouldn’t want to end up making a big announcement (QE3?) only to change their minds later on when more information comes their way, right?

In any case, if you want to learn more about what you should expect from Jackson Hole, I suggest y’all read Forex Gump’s take on the Two Issues to Focus on At Jackson Hole. Good luck, fellas! End the month on a high note!

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Big Ben Bernanke pulled a “Draghi” during his Jackson Hole speech last Friday as he disappointed the markets when he neither confirmed nor denied that the Fed was ready for QE3. With that, the Greenback ended the day lower against most of its major counterparts as most traders still believed that further easing was on the table.

As my buddy Forex Gump predicted after seeing the Beige Book report, Fed head Bernanke gave vague statements on whether QE3 was necessary or not during his latest speech in Jackson Hole. Bernanke simply stated the obvious, which was that the U.S. labor market wasn’t doing so well and that higher unemployment could be their economy’s undoing. He also pointed out that the U.S. economy was still facing several risks from the euro zone debt crisis and from their very own Fiscal Cliff.

With U.S. traders on a bank holiday today, the rest of the market participants could be left mulling about Bernanke’s latest speech. Should expect QE3 for the upcoming FOMC statement? Or will the Fed simply reiterate their pledge to keep rates exceptionally low for an extended period?

Don’t forget that, with the August NFP figure due on Friday, this week is a crucial one when it comes to the Fed’s assessment of U.S. economic performance and not to mention their monetary policy decision. Other than the ISM manufacturing PMI due tomorrow and the non-manufacturing PMI due Thursday, there are no other red flags on the U.S. calendar, which means that we might see a lot of consolidation prior to NFP Friday!

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The safe haven Greenback struggled to remain afloat yesterday as Bernanke’s Jackson Hole QE message lingered in the market. The U.S. dollar index, which tracks the performance of the currency versus other majors, fell slightly to 81.66 from 81.70.

U.S. data was non-existent yesterday as most of the country was out on holiday in observance of Labor Day. With the festivities over, it’s going to be business as usual today.

At 2:00 pm GMT, the ISM Manufacturing PMI will be released. It’s anticipated to print a reading of 51.9, similar to the reading we saw one month prior. The report usually has a significant impact on price action, so pay attention to the actual results. A higher-than-expected reading could help the Greenback recover some of its losses from the past few trading sessions.

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Are risk aversion and the Greenback best friends again? It looks like the U.S. dollar was able to benefit from the risk off environment yesterday as it ended higher against most of its major counterparts. Check out the latest U.S. data to see how it all panned out!

The U.S. manufacturing industry contracted once again in August as the ISM manufacturing PMI for the month slipped from 49.8 to 49.6 instead of rising to 50.0. This marks the third consecutive month of contraction in the industry as new orders and hiring dropped.

There are no red flags on the U.S. economic schedule for today, which means that we’ll see either a lot of consolidation or positioning ahead of the top-tier reports due later on. Better use this time to read up on the upcoming ISM non-manufacturing PMI tomorrow and the NFP report on Friday!