Daily Economic Commentary: United States

Trading Discussion News and Economy
895

Just like the first day of a new semester, the dollar went in different directions yesterday as traders came back from the Hurricane Sandy holidays. While USD/JPY jumped by 22 pips, GBP/USD also rocketed by 61 pips. What went on in the U.S. anyway?

Well, the worse-than-expected Chicago PMI report probably didn’t help the dollar. The report printed a reading of 49.9 in October, lower than the 51.0 expansionary reading that analysts were expecting. Even the quarterly employment cost index disappointed expectations with only a 0.4% growth.

Lets see if the currency bulls will show the Greenback some lovin’ today when a parade of economic reports is scheduled for release.

At 11:30 am GMT, the Challenger job cuts report is printed. Then, at 12:15 pm GMT we’ll see the ADP non-farm employment report, followed closely by the initial jobless claims at 12:30 pm GMT. Last but not the least, we’ll get hold of the CB consumer confidence data as well as the ISM manufacturing PMI at 2:00 pm GMT.

Are you planning on trading any of these reports? I sure hope so! They’re all potential market movers!

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With more and more New York traders crawling back into the workplace and thanks to good economic data, the Greenback was able to pare some of its losses from earlier this week. EUR/USD fell 21 pips to finish at 1.2941 while GBP/USD closed 14 pips lower to close at 1.6124.

ADP payrolls and weekly jobless claims surprised to the upside yesterday, which may have helped the dollar recuperate. According to the ADP report, an additional 158,000 jobs were added last month, following the 162,000 increase we saw last month. It was expected that just 138,000 more jobs would be added in September. Meanwhile, jobless claims dropped slightly to 363,000, down from the 371,000 forecast.

In other news, the CB consumer confidence index printed at 72.2, showing a nice improvement from the previous reading of 68.4, while the ISM manufacturing PMI improved slightly from 51.5 to 51.7.

Overall, it was a pretty good in terms of economic data and it’s no surprise that the dollar got some relief in the markets.

But now’s not the time to relax, as we’ve got the granddaddy of all economic reports headed our way. Y’all know what I’m talking about! That’s right, it’s NFP Friday, baby!

Word on the street is that the labor market added 123,000 jobs over the past month, which would be a nice follow up to the October NFP increase of 114,000. Meanwhile, the unemployment rate is projected to jump slightly from 7.8% to 7.9%.

Keep in mind that while the ADP report did come in better than expected, it hasn’t exactly been a good predictor of what to expect for the NFP report. That said, you’d best be served by being ready for ANYTHING to happen. Know that the U.S. markets are still in disarray following the aftermath of hurricane Sandy, so we could see some pretty wild moves today.

If you plan to trade the NFP report, make sure you have a plan in place! If you’re worried about the potential volatility in the markets, there’s no shame in sitting out and watching from the sidelines!

897

The dollar was a blockbuster hit on the charts last Friday like the new Bond Movie, Skyfall. It scored wins across the board, gaining 109 pips from the euro, 63 pips from the Aussie, and 27 pips from the yen.

For the most part, the stellar NFP report for October spurred the demand for the dollar. Data from Labor Statistics show that there were 171,000 jobs added during the month which topped the consensus for a net addition of 123,000 people in the workforce. Of course, the upward revision in September’s reading from 142,000 to 148,000 only made traders even more excited to buy the Greenback!

I’m sure Forex Gump will soon have the inside scoop on the labor data. Make sure you stay tuned for it.

As for today, we only have the ISM-non manufacturing PMI report for October on tap for the dollar. It is eyed to come in at 54.6 later at 3:00 pm GMT. However, I have a feeling that if it comes in better than expected, we could see the dollar rally. Don’t miss it, ayt?

898

Fear is in the air, baby! With U.S. voters getting set to hit the polls, the markets have been edgy and this has been beneficial to the safe haven dollar. As a result, the American currency found itself extending its gains against the euro, with EUR/USD dropping another 29 pips to land at 1.2789.

Ironically enough, the uncertainty surrounding the U.S. has worked in favor of the dollar, as traders have been cautious ahead of today’s presidential election. After all, there’s quite a bit on the line here, as Obama and Romney have differing stances on major economic issues.

Obama’s looking to raise taxes on certain companies and high income playahs, while Romney wants to implement broad-based tax cuts. With regard to China, Romney seems to want to take on the issue of the yuan’s artificially low value more aggressively, threatening to label China a currency manipulator. On the other hand, Obama has been taking a more subdued approach.

Even Fed Chairman Ben Bernanke’s job is at stake! Obama would probably keep ole’ Ben, but Romney wants our homeboy out!

Phew! Taken as a whole, it seems that the economists view an Obama victory as something that could trigger a dollar sell-off. In any case, y’all better get ready for some crazy action, folks! It only happens once every 4 years, so we could be in for a rare treat on the charts.

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The dollar’s price action in yesterday’s trading was as mixed as a piña colada. It gave up ground to its higher-yielding counterparts, with EUR/USD closing 22 pips higher at 1.2816 and GBP/USD finishing with a 22-pip gain at 1.5994. On the other hand, USD/JPY ended the day at 80.41 after opening at 80.27.

There wasn’t any market-moving report released from the U.S. Consequently, this left market participants at the edge of their seats, waiting for the outcome of the elections.

Recent price action in the forex market is pretty similar to what we saw in 2008. With that said, don’t be surprised to see a sell-off in USD/JPY and equities after the election results are announced. As I said yesterday, the re-election of President Obama could have a temporary bearish effect on the dollar because of his policies and his plan of keeping the ever-so-dovish Ben Bernanke as Fed Chairman.

Our forex calendar is still blank for reports from the U.S. today. So make sure you keep tabs on the elections, ayt?

900

It was a wild, wild Wednesday for the Greenback. The U.S. dollar index that tracks the performance of the currency versus other major currencies ended the day at 81.24, up from its opening level at 81.08.

Initially, the Greenback found itself on the back foot due to Obama’s win in the U.S. presidential election. Investors saw Obama’s victory as continuation of the ultra-accommodative monetary policy of the Fed.

As the day went on, however, risk aversion set in which enabled the Greenback to reverse its losses. Apparently, the European Commission’s latest forecast showed that the recession will deepen in 2012 and recovery will be very weak in 2013. Greece’s austerity vote also weighed in heavily on market sentiment.

Today, the U.S. economic calendar has two important reports due. The first one is the trade balance. It’s going to come out at 1:30 pm GMT and is projected to show a 44.9 billion USD deficit.

The second one is weekly initial jobless claims. It’s going to be released at the same time as the trade balance and it is expected to report that 367,000 people claimed for unemployment insurance in the past week.

901

The dollar bulls partied in the streets yesterday as risk aversion continued to grip the markets. USD/JPY missed the memo though, and dropped 51 pips from its open price. So what exactly pushed the Greenback higher?

Blame it on risk aversion! Thanks to ECB’s Draghi making grim statements about Greece and Spain and the BOE doing nothing to increase its stimulus, investors found it easy to flock to the lower-yielding currencies. But more on that on my EUR and GBP updates.

It also didn’t hurt the dollar that the U.S. coughed up better-than-expected economic reports. Initial jobless claims fell to 355,000 last week after clocking in at 363,000 in the previous week. Even the trade balance data supported the Greenback a bit with only a 41.5 billion USD deficit against the expected 44.9 billion number.

Only the preliminary UoM consumer sentiment data at 3:55 pm GMT is scheduled for release today, so you might want to pay attention to the euro area for direction of risk sentiment.

Good luck and good trading, kids!

902

Thanks to a wide-reaching case of risk aversion, the dollar was able to reign supreme last Friday. It pummeled other major currencies, especially the European currencies like the euro and the pound. The U.S. dollar index, which began the day at 81.26, ended the week at 81.49.

The pullback in risk was the result of the market’s focus shifting to the U.S. fiscal cliff. The U.S. fiscal cliff refers to the effect of a number of laws that could result in tax increases and spending cuts. While the laws aren’t necessarily bad, it could push the U.S. into a recession.

In other news, economic data released last Friday was positive. The University of Michigan Consumer Sentiment Survey smashed expectations and printed an 84.9 reading. The forecast was for it to remain at 82.6. The report on Import Prices was also higher than consensus. It came in with a 0.5% gain versus the 0.0% the market had initially anticipated.

This week, we’ve got a couple of market-moving events scheduled to happen. The reports start coming out on Wednesday, when the U.S. retail sales and producer price index publish. Retail sales are expected to have remained flat for the month of October while the producer prices are expected to have risen by 0.2%. Both reports are going to be released at 1:30 pm GMT.

The minutes of the most recent FOMC meeting will also be released on the same day. It’s an important report to watch because it provides a valuable insight into the economic and financial conditions that drive the Fed’s monetary policy.

On Thursday, we’ll see the U.S.’s Consumer Price Index and the Philadelphia Fed Manufacturing Index. The CPI is projected to show a 0.1% increase in October while the Philadelphia Fed Manufacturing Index is expected to show a reading of 2.3.

903

The dollar’s price action was as mixed as a bag of jelly beans yesterday as the lack of U.S. data pushed traders to trade on risk sentiment. EUR/USD inched 8 pips higher while USD/CHF slipped by 13 pips.

Since the U.S. was celebrating Veteran’s Day yesterday, investors found it easy to trade on risk sentiment. And boy did they have a lot to consider!

Aside from the usual concerns about Spain getting a bailout or Greece defaulting on its debts, traders also paid attention to China’s trade numbers, Japan’s GDP figures, and the looming U.S. fiscal cliff.

If you can’t wait to trade U.S. reports today, then you should check out the IBD/TIPP economic optimism numbers out at 4:00 pm GMT, followed by the Federal budget balance figures at 8:00 pm GMT.

904

Up, up, and aw…Ka-blam! The dollar was trading higher against its counterparts early on in yesterday’s trading when its rally all of a sudden lost steam. It then finished the day with a mixed scorecard, incurring losses against the comdolls and the yen but gaining against its European counterparts.

Without any major economic data on tap, traders focus their attention on the U.S. fiscal cliff and Greece’s bailout talks.

Perhaps we’ll see the dollar trade in a clearer direction in today’s trading with a handful of top-tier events scheduled from the U.S.

We kick things off at 1:30 pm GMT with the PPI and retail sales reports for October. The headline PPI figure is anticipated at 0.2% while the core reading is seen at 0.1%.

Meanwhile, the retail sales report is eyed to come in at -0.2% but excluding volatile items, consumer spending is estimated at 0.2%. Some analysts are saying that we could see an upside surprise though. They think that the stellar NFP report for October will also be reflected in the retail sales report.

Then at 7:00 pm GMT, the minutes of the most recent FOMC meeting will be released. Just like the last rate statement, the minutes could prove to be a non-event for the market. However, should the minutes show a deeper discussion about the improvements in the economy, the dollar could get sold-off on risk appetite.

Don’t miss it, ayt?

905

Boy, do American central bankers know how to pull off a surprise! The minutes of the last FOMC meeting revealed that policymakers are leaning towards implementing more easing measures next year. You can bet that that was enough to send the dollar lower against some of its counterparts!

EUR/USD traded higher, closing the day 46 pips above its opening price at 1.2746 while USD/CHF was down 30 pips at .9444 by the New York session close.

A deeper look at the report reveals that central bankers are worried about the potential impact of the European debt crisis and the fiscal cliff on the economy. These prospects surely don’t paint a pretty picture for the U.S. especially since Operation Twist is scheduled to end in December.

Yesterday’s roster of economic data only affirmed fears of the FOMC members too. Despite a stellar NFP report for October, the retail sales report shows that job gains didn’t translate to spending during the month. The headline consumer spending figure came in at -0.3% and fell short of the market’s forecast by 0.1%. Meanwhile, the core reading printed flat and disappointed the consensus which was for a 0.2% uptick.

The PPI report also had nothing for the dollar bulls to be happy about when it printed at -0.2% versus the 0.2% estimate.

Today we still have quite a handful of economic reports to be released and it would do you good to keep tabs on them! Risk aversion kept the dollar afloat against some of its counterparts like the comdolls and the pound, while political instability allowed it to gain against the yen. However, I have a feeling that it traders would soon realize the prospect of further easing from the Fed should more disappointing data come out.

The CPI report is scheduled to be released at 1:30 pm GMT with both the core and headline readings seen at 0.1%. Along with it, the unemployment claims and the Empire State manufacturing index are also due. The number of people who applied to jobless benefits last week is estimated at 372,000 while manufacturing conditions in New York is anticipated to show further contraction for November with the index eyed at -7.2.

Then at 3:00 pm GMT, the Philly Fed manufacturing index for November is anticipated at 1.1.

Also, don’t forget to keep an ear out for what Fed head honcho Ben Bernanke has to say later at 6:20 pm GMT! He’s supposed to give a speech in Atlanta and he could drop some hints on the Fed’s future monetary policy decisions!

906

The dollar’s scorecard in yesterday’s trading was as messy as Cyclopip’s face after a Sloppy Joe eating contest. It managed to end the day higher against the pound, Aussie, Kiwi, and the yen. However, it gave up ground to the euro, Swiss franc, and Loonie.

But with yesterday’s roster of economic data printing mixed figures, it’s not much of a surprise to see the dollar wander aimlessly on the charts.

On the positive side of things, the CPI report and Empire State manufacturing index printed better-than-expected. While the headline inflation figure just came in as expected at 0.1% for October, the core reading (which excludes volatile items) printed higher at 0.2% than the 0.1% forecast. The Empire State manufacturing index on the other hand showed that manufacturing conditions somehow improved in November, coming in at -5.2 after printing at -6.2 in October.

The unemployment claims report and Philly Fed manufacturing index offered nothing to be impressed with though. Data showed that the number of individuals who filed unemployment benefits was at 439,000 last week, topping expectations which was for 372,000 people. Market participants were also disappointed with manufacturing conditions in Philadelphia as the Philly Fed manufacturing index coming in at -10.7 versus the 1.1 forecast.

Today our forex calendar only lists a couple of second-tier data. I have a feeling that the dollar will take its cue from market sentiment in today’s trading. Due at 2:15 pm GMT, the TIC report for September is expected to show that foreign demand for long-term U.S. securities outpaced domestic demand by 75 billion USD. Along with that, the industrial production report for October is seen to print a 0.2% uptick.

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The Greenback sure knows how to mix things up, doesn’t it? After last Friday’s trading, the U.S. currency closed higher against the euro, franc, and yen but posted losses against the pound and Kiwi. Will it be able to find a clearer direction today?

Only a few medium-tier reports were released from the U.S. last Friday, which was probably why the Greenback had a tough time holding on to some of its gains. TIC long-term purchases came in much weaker than expected at 3.3 billion USD versus the expected 75.0 billion USD, reflecting weaker demand for the U.S. dollar. Industrial production and capacity utilization also missed expectations, hinting at a slowdown in the industrial sector.

For today, only the existing home sales is set for release and this report is expected to print a 4.76 million figure for October, slightly higher than the previous month’s 4.75 million reading. Make sure you keep an eye out for that release around 4:00 pm GMT because it could trigger volatility among dollar pairs!

Tomorrow, the U.S. is set to release more housing data in the form of building permits and housing starts, both of which are projected to show small declines in October. The initial jobless claims release will come a day earlier on Wednesday as U.S. bankers and traders will be off on their Thanksgiving holiday on Thursday.

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It wasn’t the best of days for U.S. dollar bulls as the Greenback lost ground to all of its major counterparts. After opening at 1.2744, EUR/USD closed 8 pips above the 1.2800 handle, with the Greenback posting even bigger losses against the commodity currencies.

The October existing home sales figure came in better than expected at 4.79M, higher than the consensus at 4.76M. Although the previous month’s figure was revised down from 4.75M to 4.69M, hinting that there are still weaknesses in the U.S. housing sector, the strong October figure was still enough to boost risk appetite and push traders away from the safe-haven Greenback.

Today, the U.S. is set to release a couple more housing reports, namely the building permits and housing starts. For October, building permits are expected to dip from 0.89M to 0.87M while housing starts are projected to fall from 0.87M to 0.84M. Watch out for the actual release at 2:30 pm GMT because stronger than expected data could lead to another risk rally.

Don’t forget that Fed head Ben Bernanke is set to give a speech at 6:15 pm GMT and that this could cause extra volatility among dollar pairs. Stay on your toes!

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The dollar did a pretty good job at holding its ground - it ended the day virtually unchanged against the euro, while gaining 36 pips against the yen. Will dollar bulls finally take control today?

It’s been tough trading the dollar lately - you never know which way the market will go!

Yesterday, the dollar was surprisingly resilient, which suggests that the markets seem to be giving more importance to risk aversion than the U.S.'s economic problems. In his speech last night, Fed head Ben Bernanke said he wants to see the labor market improve and ensure that the recovery is on solid ground before considering interest rate hikes. But the main thing we should take away from his speech is that central bank is ready and willing to ease its monetary policy further - something that is normally dollar bearish.

In other news, yesterday’s economic releases were mixed. Building permits slid from 890,000 to 870,000 as expected. Meanwhile, housing starts picked up from 860,000 to 890,000, instead of falling to 840,000 as most had forecasted.

No tier 1 reports on tap today, but we do have a few releases that are worth catching. First, we have the initial jobless claims report due at 1:30 pm GMT. Survey says claims likely fell from 439,000 to 415,000.

Then at 2:00 pm GMT, we’ll take a look at the flash manufacturing PMI, which is slated to rise from 51.0 to 51.2. And lastly, at 2:55 pm, the revised University of Michigan consumer sentiment index is expected to dip from 84.9 to 84.3.

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Ka-blam! Except for the yen, the major currencies slammed the Greenback down the charts yesterday. EUR/USD blasted above its 1.2800 resistance while USD/CHF fell from an intraday high of .9459 and closed at .9389. Ouch! What the heck happened?

Blame it on risk sentiment! Just when we thought that the dollar is in for another green day, the currency bulls and bears decided that it was okay for the euro zone lawmakers to postpone their decision on Greece’s bailout. What’s another couple of days in return for lasting changes, right?

It also didn’t help that the U.S. printed weak economic reports. The initial jobless claims data is still distorted by Hurricane Sandy’s impact, so traders are waiting to see if it will go below 400K in the next few weeks. Right now though, the data printed at 410K, smaller than the expected 415K figure and last week’s upwardly revised 451K number.

The flash manufacturing PMI should’ve provided the Greenback some relief when it printed at 52.4 against expectations of a 52.1 reading. The revised UoM consumer sentiment report disappointed though, as it was downwardly revised to 82.7 from 84.9.

Today the U.S. traders will take a breather from all the economic drama and take a moment to be thankful for everything they have together with the people who matter to them. No reports are scheduled from Uncle Sam today, so prepare for low volume and possibly low volatility in the charts.

Happy Thanksgiving everyone!

911

When U.S. traders are away, dollar sellers will play! While U.S. banks were closed in celebration of Thanksgiving Day, sellers had their way with the dollar, dumping the American currency and causing it to weaken against all of its major counterparts except for the pound and Loonie.

The absence of U.S. traders allowed the bears to take control of dollar pairs once again. As it turns out, developments in the euro zone played a big role in yesterday’s anti-dollar sentiment. Thanks to Greece aid deal hopes, traders had the courage to exchange the safe haven currency for higher-yielding assets.

We still won’t be getting any reports from the U.S. today, but there’s a good chance we’ll see big moves as traders return from Thanksgiving Day celebrations. In the past, the day after Thanksgiving has resulted in high volatility and breakout opportunities, so be prepared for whatever may come your way!

912

Were all the U.S. traders off shopping? Because we got a major SALE to end last week! I ain’t talking about Black Friday sales though, I’m talkin’ about the sell-off on the Greenback, baby!

EUR/USD rose a solid 88 pips to finish at 1.2971, while GBP/USD closed at 1.6032, up 96 pips from its opening price. What gives?

Apparently, good data from Europe and China helped boost risk appetite, allowing higher-yielding currencies to outpace the scrilla.

For today, we’ve got no hard data headed our way, but do be careful, as U.S. traders will be making their ways back to the office after the long weekend. Some of them may need to re-establish their position trades, which could lead to a surge in volatility.

Tomorrow, we’ve got some red flags going up the economic totem pole in the form of durable goods and the CB consumer confidence index.

Durable goods orders are seen to have declined by 0.6%, both on the headline and core levels. This is somewhat disappointing, as we saw orders rise by 9.8% and 2.0%, respectively, in the previous month. Watch out for this report when it hits the airwaves at 1:30 pm GMT.

Meanwhile, it seems that consumers are continuing to be more confident about the state of the economy. The CB consumer confidence index, which will be released at 3:00 pm GMT, is projected to have risen to 73.1. This would mark the 4th consecutive month that index has risen, as well as the highest reading in over 4 years.

Good luck trading today, my forex friends!

913

The Greenback’s performance was as mixed as a bag of nuts as it ended higher against the pound and Loonie, closed lower than the Kiwi and yen, and had a stalemate with the Aussie and euro. Will it be able to find a clearer direction today?

The lack of economic data from the U.S. yesterday was probably to blame for the Greenback’s mixed performance. Now that traders are back from their Thanksgiving holidays after scoring plenty of deals on Black Friday and Cyber Monday, we might be able to see clearer price action among the dollar pairs.

The U.S. is set to print its durable goods orders data at 2:30 pm GMT. Both headline and core figures are expecting to see -0.6% declines for October, after rising by 2.0% and 9.8% respectively in the previous month. Later on, at 4:00 pm GMT, the U.S. will release its CB consumer confidence figure and possibly show an improvement from 72.2 to 73.1 for the current month. Bear in mind that weaker than expected figures could spark risk aversion, which could be good for the safe-haven Greenback!

Also keep in mind that the U.S. Congress will be back in session starting today, which means that they’ll be able to get the ball rolling when it comes to their discussions on what to do about the looming Fiscal Cliff. Stay tuned for any updates on this issue because signs of progress could be bullish for the U.S. dollar.

914

Let’s all give a forex high-five to the scrilla, which edged its way higher in yesterday’s trading matches. After hitting a high at 1.3009, EUR/USD dropped and finished at 1.2934, down 28 pips from its opening price. Meanwhile, AUD/USD closed 52 pips off its high to finish at 1.0448, marking a 10-pip loss for the day.

One reason why the dollar may have benefited yesterday was because of better-than-expected economic data. Headline durable goods orders growth came in flat, while core growth (which excludes automobile purchases) clocked in at 1.5%. It was anticipated that we would see -0.6% declines in both accounts.

Meanwhile, the CB consumer confidence index printed at 73.7, marking a decent improvement from last month’s upwardly revised reading of 73.1. Don’t look now, but confidence is at its highest level in FOUR years. Boo yea!

On the flip side, one could also argue that risk aversion was the reason why the Greenback pummelled its way to victory yesterday. Concerns about the fiscal cliff continue to weigh on the markets, and even Senate Harry Reid is saying that not much progress has been made.

For today, we’ve got more hard data on tap as new home sales figures and the Beige Book will be available at 3:00 pm and 7:00 pm GMT, respectively. The annualized pace of new home sales is projected to come in at 387,000, just down from the 389,000 pace we saw last month.

Meanwhile, we could get some insight from the Beige Book as to what kind of data the Fed is taking a look at to formulate its view on the state of the economy.