Daily Economic Commentary: United States

Trading Discussion News and Economy
995

The U.S. dollar lost ground to most of its counterparts during yesterday’s trading as EUR/USD reached a high of 1.2868 while GBP/USD rallied above the 1.5200 handle. Will the Greenback extend its losing streak today?

The weaker than expected U.S. ISM manufacturing PMI number triggered a round of dollar-selling as the figure came in at 51.3 for March, lower than the estimated 54.2 reading. This shows that the expansion in the manufacturing industry is slower than predicted and is weaker compared to the previous month’s growth.

Up ahead, only the factory orders report is due from the U.S. and it is expected to show a 3.1% rebound on February, up from the 2.0% decline posted last January. Another weak figure could drag the Greenback down so make sure you keep close tabs on the actual release at 3:00 pm GMT.

996

The U.S. dollar showed some firmness yesterday as it was able to rally against most major currencies. Against the euro, for instance, the dollar managed to gain a decent 30 pips. Against the pound, the dollar scored 128 pips.

Data released pretty much came in line with the market’s forecasts. The U.S. Factory Orders report showed a rise of 3.0%, slightly lower than last month’s 3.1% increase. Meanwhile, the IBD/TIPP Economic Optimism survey printed a reading of 46.2. The initial estimate was for a reading of 46.1.

The U.S. economic calendar has two red flags today.

The first one, which will be published at 12:15 pm GMT, is the ADP non-employment report. It is anticipated to show the total number of people employed increased by 203,000 in March after rising 198,000 in February. Traders keep a close eye on the ADP report because it is considered as a leading indicator for the U.S. non-farm payrolls on Friday.

The second one, which will be released at 2:00 pm GMT, is the ISM Manufacturing PMI. It’s estimated to show a reading of 55.9. Last month, the reading was at 56.0. A decreasing figure is normally seen as negative for the domestic currency because it suggests that the manufacturing sector is contracting.

997

What goes around comes around, so they say. The Greenback learned this the hard way as it returned some of its recent gains to its major counterparts yesterday. EUR/USD pulled up to the 1.2850 area while GBP/USD retraced to 1.5150. What caused the dollar selloff?

Weaker than expected data from the U.S. weighed on the Greenback during the New York session as both the ADP non-farm employment change figure and the ISM non-manufacturing PMI fell short of consensus. The jobs figure came in at 158K instead of the projected 203K reading, but the previous figure was revised up from 198K to 237K. The ISM non-manufacturing PMI dipped from 56.0 to 54.4, lower than the estimated 55.9 reading, showing that the expansion in the industry slowed down more than expected.

For today, there are a bunch of central bankers set to give speeches and possibly drop some hints on the Fed’s future monetary policy moves. Keep your ears peeled for Bernanke’s remarks around 3:30 pm GMT and for FOMC members George and Yellen to give testimonies starting 5:30 pm GMT.

The only piece of data due from the U.S. today is the weekly jobless claims report, which is expected to come in at 352K, slightly lower than the other week’s 357K figure. Stay tuned for that at 1:30 pm GMT.

998

You win some, you lose some! The Greenback’s performance yesterday was a mixed bag as it gained a significant amount of ground versus the low-yielding yen and the Aussie but lost terribly versus the major European currencies.

The Greenback declined versus the European currencies due to the poor results on its unemployment claims report. The report showed that the number of people who claimed for jobless insurance last week climbed to 385,000 from 357,000. It was also much higher than the forecast of 352,000. It also helped that the ECB and the BOE chose to make no changes to their respective monetary policies.

In the Asia-Pacific region, the dollar staged a major rally due to the news that BOJ Kuroda had finally pushed through with his promise to ramp up the central bank’s quantitative easing program. Kuroda announced that the central bank would double the amount of bonds it purchases per month so that it could achieve its 2% inflation target by 2015.

Today will be a very important day for the dollar as the U.S. employment report will be published. The release of the U.S. employment report is probably the most-watched event in the foreign exchange market, so you better brace yourself for a lot of volatility.

The report, which will come out at 12:30 pm GMT, is expected to show that 198,000 net workers has been added to the labor force in March, and that the unemployment rate remained at 7.7%. Forex Gump talks more about the employment report in his latest blog post, so make sure you take time to read it!

999

Geronimoooo!!! The Greenback capped the week with sharp losses against its counterparts as the NFP report revealed that all is not well in the U.S. jobs sector. EUR/USD shot up by 71 pips while USD/CHF fell by 63 pips.

Last Friday the much awaited nonfarm payrolls report shocked the markets when it printed way below than its expectations. Just when we thought that the U.S. jobs sector is showing improvements, the NFP report showed that only 88,000 jobs were added last month. This is not only weaker than February’s 268,000 reading but is also the weakest since June last year.

The sub-100K reading shocked investors so much that they barely paid attention to the U.S. trade balance, which printed a 43.0 billion USD deficit instead of the expected -44.8 billion USD figure. The unemployment rate could have inspired good vibes when it dropped from 7.7% to 7.6% but any optimism was dashed when traders realized that the jobless rate fell because of the drop in participation rate.

Will the Greenback suffer more losses this week? Only Ben Bernanke’s speech at 11:15 pm GMT is scheduled for today but over the next couple of days we’ll also see the big FOMC meeting minutes, the U.S. retail sales, and the preliminary reading of the UoM consumer sentiment. These reports will show us hints of the Fed’s plans and consumer activity in the U.S. so don’t even think of missing them!

1000

Not a good start to the week for the scrilla, as it found itself trailing the other major currencies, with EUR/USD, NZD/USD, and AUD/USD all ending the day higher. Could we see more of the same today?

Looks like the bad vibes following last Friday’s NFP disaster have carried on over the weekend. We may not see much movement in today’s trading, but do keep in mind that earnings season is beginning for the stock market. A slew of good reports could provide some punch for the Greenback to recover from its recent losses.

1001

Relatively quiet day for the scrilla, as it pretty much stayed in range against its major counterparts. The only outliers were GBP/USD and AUD/USD, as they both climbed slightly higher. Will we see more of the same today?

No surprise that dollar pairs price action pretty much remained subdued, as no data was released during the New York session. That could all change today though, as the latest FOMC meeting minutes will be released.

Keep in mind that we’ve seen a variety of comments from Fed members during the past few meetings, but we saw no significant changes during the last statement. With the NFP report failing miserably, it will be interesting to see what was discussed during the last meeting and whether the committee is now more pessimistic over the state of the economy.

In any case, tune in at 6:00 pm GMT, as we could be in for some wild rides in the forex market!

1002

Looks like someone’s been going to the gym! The U.S. dollar flexed its muscles during yesterday’s trading sessions as it managed to end higher against most of its counterparts. EUR/USD found resistance around 1.3100 and closed at 1.3052 while USD/JPY made new highs and closed at 99.68.

The FOMC meeting minutes caused a bit of ruckus in the markets since the report was released a few hours earlier than scheduled. As expected, the minutes didn’t really contain anything groundbreaking as most traders found the policymakers’ remarks no longer relevant since they were made prior to the March NFP release. The minutes showed that Fed officials were still divided on whether to gradually reduce asset purchases or not.

For today, only the initial jobless claims report is due from the U.S. and it is expected to print a reading of 362K, lower than the other week’s 385K figure. Worse than expected results would put the focus back on the weak U.S. jobs market, which might trigger a dollar selloff, so keep an eye out for the actual release at 1:30 pm GMT.

1003

Dollar trading was as smooth as a Shaquille O’neal free throw… which means to say it’s performance yesterday was terrible! EUR/USDrose 37 pips to finish at 1.3104, while GBP/USD climbed 61 pips to end the day at 1.5387.

Not even better-than-anticipated jobless claims figures could boost the Greenback yesterday. Unemployment claims dropped to just 346,000, after it was sitting at a four-week average of 388,000 last week. This was also lower than the anticipated 362,000 figure.

In other news, Fed member Plosser basically downplayed last week’s poor employment figures, saying that the NFP report tends to be very volatile, and in fact said that all evidence points to an improving labor market. I don’t quite agree with him 100%, but I do think we need to wait a few months to see how the labor market is actually performing.

Make sure you tune in later at 12:30 pm GMT, when the retail sales report hits the airwaves. Expectations are that core and headline retail sales will clock in at -0.1% and 0.0%, respectively. Make sure you hit up Forex Gump’s trading guide for some tips on how to play this report!

Later on at 1:55 pm GMT, the preliminary University of Michigan consumer sentiment report will also be made available. Expectations are that the index improved slightly from 78.6 to 79.1 Keep in mind that consumer sentiment is highly correlated to retail sales and GDP growth, because if everyday Joes like you and I are more confident about the state of the economy, then the more likely we’ll spend, which in turns adds to the bottom line. Watch out for a strong figure, as this could give the dollar bulls the momentum they need to salvage some of their losses throughout this week.

1004

Aww, snap! The dollar gave up ground against most of its counterparts on Friday following the disappointing U.S. retail sales report. USD/JPY was down 121 pips for the day at 98.64. Meanwhile, the dollar pared the gains it racked earlier on in the day from the euro, when EUR/USD bounced off 1.3050 and closed at 1.3103.

Data on consumer spending showed that spending dropped by 0.4% in March, much worse than the reading anticipated by analysts at 0.0%. Excluding volatile items, the core retail sales report came in at -0.4% versus the -0.1% forecast.

Of course, this was bad news for the dollar as it led to speculations that the Fed would keep its very loose monetary policy in place for an extended time.

Today, a couple of second-tier data are scheduled for the dollar. Due at 12:30 pm GMT, the Empire State Manufacturing index is seen to come in at 7.2. Meanwhile, the TIC report is eyed at 41.3 billion USD and is scheduled at 1:00 pm GMT.

Make sure you don’t miss them as their outcomes could determine the dollar’s fate in today’s trading!

1005

What a start to the week for the Greenback! With all the bad data hitting the markets, the dollar benefitted from a nice run of risk aversion, as it simply dominated the rest of the major currencies.

The combination of worse-than-expected Chinese data, as well as concerns about Cyprus, helped the dollar edge higher yesterday. This was a welcome development for the dollar bulls, as they got killed last week.

In other news, the Empire State manufacturing index printed in the red, as it dropped from last month’s score of 9.2 to just 3.1. This was also below the forecasted figure of 7.2.

Meanwhile, the TIC long-term purchases report indicated that foreign investors were net sellers of USD-denominated securities, as they sold 17.8 billion USD more than they bought. Apparently, concerns about the U.S. budget and fiscal cliff were main reasons why investors dumped their dollars over the past couple of months.

For today, we’ve a slew of second tier data headed our way.

At 12:30 pm GMT, housing starts and building permits will be made available, with the former expected to clock in at 930,000, and the latter at 940,000.

At the same time, the headline and core CPI reports will be released and are projected to print inflation figures of 0.0% and 0.2%, respectively.

Later on at 1:15 pm GMT, month-on-month industrial production growth figures will be made available, with expectations being that it rose by 0.3% last month. This would be a decent follow up to the 0.7% increase we saw last month.

Truthfully though, I don’t think these will be major market movers. Pay close attention to overall sentiment, as this will probably be the major driver of trading today.

1006

Where did all 'em dollar bulls go? After finishing at the top of the pack last Monday, the dollar gave up ground to all of its higher-yielding counterparts in yesterday’s trading. It was only able to finish the day higher against the yen. What gives??

It would seem that risk appetite made a comeback. There wasn’t any catalyst behind the strong upside break in EUR/USD. However, equities did make a rally yesterday. Some analysts think that the forex market may have just mimicked the move in the stock market.

But I guess it also didn’t help the dollar that released reports from the U.S. came in below expectations.

The headline CPI report for March printed at -0.2% when it was anticipated to come in flat. Excluding volatile items, the core CPI report was 0.1% short of the forecast at 0.2%.

Building permits issued during the month was also lower than expectations at only 900,000 versus the 940,000 forecast.

On the brighter side of things, data on housing starts came in higher than the expected 930,000 reading at 1.04 million. Industrial production also grew more than expected in March by 0.4% versus the 0.3% consensus.

Only the Beige Book is due for the dollar today at 6:00 pm GMT. If it shows that Fed districts saw sustained weakness in the economy from March to April, we could see the dollar lose more ground.

Make sure that you also get a good gauge of the market’s mood before you pull the trigger on any dollar trade, ayt? Keep in mind that it usually rallies when risk aversion is in play.

1007

Due to disappointing corporate earnings, risk aversion ended up as the dominating market theme yesterday. This meant that the Greenback reigned supreme, and showed everyone who the true king of the foreign exchange market is. The U.S. dollar index, which tracks the performance of the Greenback versus a basket of other major currencies, rose to 83.13 from 82.30.

In other news, the Fed’s Beige Book released yesterday showed that the U.S. economy grew at a moderate pace through early April, thanks to the strong residential construction and vehicle manufacturing. However, the overall labor market (which is the main basis of the Fed’s monetary policy), remained unchanged.

Whether the rally we’re seeing in the Greenback will continue or not remains to be seen. For now, focus your attention on the upcoming reports, as they could determine the currency’s next move.

At 12:30 pm GMT, the U.S. initial jobless claims will be published. It’s projected to show a 349,000 figure, up from the previous week’s 346,000. Then, at 2:00 pm GMT, the Philadelphia Fed Manufacturing Index will be released. It’s estimated to print a reading of 2.7, slightly higher than last month’s 2.0.

1008

Not much action on USD pairs yesterday, although we did see the Greenback give back some of its gains against its European counterparts from the day before. EUR/USD finished 21 pips higher at 1.3051, while GBP/USD closed at 1.5281, up 42 pips from its opening price.

One reason why the dollar took a hit was due to poor economic data from Uncle Sam. Weekly jobless claims rose to 352,000, while the Philly Fed Index printed a reading of just 1.3. Not only were these worse than last month’s scores, but they also failed to hit forecasts of 349,000 and 2.7, respectively.

No biggies on tap today, but do keep in mind that the G20 started their meeting yesterday. Who knows what some hotshot finance minister might say about the currency markets!

1009

The dollar’s price action was as mixed as a piña colada last Friday. It traded notably higher versus the yen and the pound but it wasn’t able to perform the way same versus the euro. The U.S. dollar index that tracks the performance of the Greenback against a basket of other major currencies rose to 83.20 from 83.04.

It seems that risk aversion continues to be the dominating market theme as worries over the global economic recovery persist. For instance, in China, the GDP report did not meet expectations, sparking a sell off in risk early in the week. In the U.S., there was the Boston Marathon Bombing and the sharp decline 300-point decline of the DOW Jones Index. Meanwhile, precious metals like gold dropped significantly.

No data was released last Friday but looking ahead the week, we’ve got a couple of red flags scheduled.

Today, at 12:30 pm GMT, the existing home sales report will be published. It’s anticipated to show that an annualized 5.02 million homes were sold last month. In the previous month, the number was at 4.96 million.

On Tuesday, await the release of the new home sales report. It’s expected to show a 419,000 figure, up from last month’s 411,000.

On Wednesday, there’s the Durable Goods Orders. A 0.5% increase for the month of March is predicted for the core version, which, if holds, will be a welcome improvement from February’s 0.7% decline. Unfortunately, the less important (but still significant of course) headline version is expected to show a 2.8% decline.

The last report important report on the docket is the Advanced U.S. GDP for Q1 2013. It’ll be published on Friday, and it is estimated to show that the economy grew 3.0%. Since it is the first estimate, it can have a strong impact on price action, so you better keep a close eye on this one!

1010

Another mixed day for the Greenback! With no major market theme dictating the currencies’ price action, the US dollar ended up all over the charts. It gained a bit on the euro and the franc but was knocked back by the pound and the yen.

The only noteworthy report out from the U.S. yesterday was the existing home sales data, which showed that only 4.92M worth of previously owned homes were sold in March. This is worse than the expected 5.02M figure and the downwardly revised (4.98M to 4.95M) data in February.

We’ll probably see more action today when the U.S. prints its manufacturing PMI report at 1:00 pm GMT, followed by the new home sales data at 2:00 pm GMT. Major U.S. reports tend to directly impact the dollar’s price action nowadays so y’all better prepare for these releases!

1011

Like cheese and nachos, there’s no denying that the dollar and risk aversion go really well together. Concerns about slowing global growth sparked risk aversion in yesterday’s trading and allowed the dollar to score gains against all of its higher-yielding counterparts. Boo yeah!

GBP/USD was down 40 pips for the day at 1.5242, while EUR/USD closed below 1.3000 for the first time since April 9!

Disappointing manufacturing data from China initially spooked investors out of higher-yielding assets in the Tokyo session when the HSBC manufacturing PMI printed at 50.5 versus the 51.4 forecast. Then, in the London session, worse-than-expected PMIs from Europe came in one after another.

Finally, in the New York session we saw the U.S. manufacturing PMI report for March print at 52.0 versus the 53.8 forecast. On top of that, the Richmond manufacturing index printed a contraction at -6, well below the estimate at 3.

Will the trend continue in today’s trading?

Perhaps, but be sure to watch out for reports on the docket today. The German Ifo Business Climate (check out my EUR commentary to read more about it!) and U.S. durable goods reports are the two top-tier data scheduled.

Due at 12:00 pm GMT, the headline durable goods reading is seen to print a 2.9% contraction. Meanwhile, excluding volatile items, the core figure is anticipated at 0.5%.

Disappointing data could once again spark risk aversion and send the dollar higher. So make sure you don’t miss them!

1012

Are the dollar bulls and bears experiencing calm before the storm? Though the dollar slipped against most of its counterparts, traders mostly ignored the weak data that came out of the U.S.

If you think that a couple of weak reports from the euro zone is all it will take to get the Greenback up and running then you better think again! The dollar gained only a bit against its major counterparts in early London trading, but was quickly put back in its place as U.S. traders joined the party.

Of course, it might have also helped the dollar bears that the U.S. printed a weak durable goods orders report. The headline figure showed a 5.7% decline in March, which is a lot weaker than the 5.6% uptick that we saw in February. Even the core figure, which excludes volatile prices, such as transportation, disappointed its 0.5% growth expectations by clocking in at -1.4%.

Only the weekly initial jobless claims data at 12:30 pm GMT is scheduled for today so the dollar will most likely trade on its counterparts’ price action. Keep an eye on the euro region, the SNB, or even the BOJ for any news that might affect risk sentiment!

1013

Not again! The U.S. dollar chalked up another losing day to most of its major counterparts as GBP/USD surged to the 1.5450 area while USD/JPY dipped back to the 99.00 handle. Are there any catalysts that could trigger a bounce today?

The only piece of U.S. data released yesterday was the initial jobless claims report which came in better than expected at 339K versus the estimated 352K in first-time claimants. While this hinted of a slight improvement in the labor market, it failed to provide support for the U.S. dollar throughout the day.

For today, the big event for the U.S. is the release of its advanced Q1 2013 GDP figure. The report is predicted to show growth of 3.1%, higher than the previous reading of 0.4%. Since the Greenback seems to be reacting to fundamentals lately, a stronger than expected reading could give the currency a boost while a weaker than expected result might trigger a selloff. Stay on your toes for the actual release at 1:30 pm GMT!

After that, the U.S. will print its University of Michigan revised consumer sentiment figure at 3:00 pm GMT and possibly spark a reaction from the dollar pairs if there are any large revisions.

1014

The Greenback took a major hit last Friday, no thanks to the worse-than-expected Advance GDP report for Q1 2013. The U.S. dollar index, which tracks the performance of the Greenback versus a basket of other major currencies, fell to 82.94 after it had opened the Asian trading session at 83.30.

According to the Advance GDP report, the United States grew only 2.5% in Q1 2013, significantly lower than the 3.1% growth initially forecasted. It’s important to note, however, that it’s still considerably better from Q4 2012’s 0.4% (revised up from -0.1%). The weakness in the GDP was apparently due to the huge reduction in defense spending.

In other news, the revisions for March’s University of Michigan consumer sentiment survey also came in. It reported that the reading for March was revised up much higher than expected to 76.4 from 72.3. Market participants had predicted that it would only be revised up to 73.3.

This upcoming week will be a big one as the U.S. forex calendar is full of market-moving events. I’ve outlined all of them below:

[ul]
[li]Monday – Pending Home Sales (2:00 pm GMT)[/li][li]Tuesday – Chicago PMI (1:45 pm GMT), CB Consumer Confidence Survey (2:00 pm GMT)[/li][li]Wednesday – ADP Employment Change (12:15 pm GMT), ISM Manufacturing PMI (2:00 pm GMT), FOMC Statement (6:00 pm GMT)[/li][li]Thursday – Trade Balance and Initial Jobless Claims (12:30 pm GMT)[/li][li]Friday – Employment Report (12:30 pm GMT), ISM Non-Manufacturing PMI (2:00 pm GMT)[/li][/ul]
How they will affect price action remains to be seen. However, judging from how the dollar has been moving in accordance to monetary policy expectations, better-than-expected results could trigger speculation that the Fed will tighten monetary policy and lead to a rally. Be careful with your trades this week folks!