Daily Economic Commentary: United States

Trading Discussion News and Economy
1095

It looks like the markets were divided as to where they wanted to take the dollar! The American currency ended the day stronger against the comdolls, but it lost ground to the yen, euro, pound, and Swissy. Where is it going to head today?

Though the U.S. didn’t publish any reports to start the week, the country did draw attention from the markets because of its rising Treasury yields; 10-yr note reached as high as 2.90% which is the highest since July 2011. If they keeps rising at this rate, it may just cause the Fed to reconsider tapering its asset purchases next month.

Again, no reports on the economic docket today. But if you’re looking for news to trade, you might find something worthwhile on our economic calendar. Check it out, folks!

1096

Without any economic data on tap, the dollar got bullied in yesterday’s trading. It gave up 23 pips to the yen, 83 pips to the euro, and 22 pips to the pound. Ouch!

From the looks of it, the currency fell victim to market sentiment. Good news from the euro zone inspired a bit of risk appetite and boosted higher-yielding currencies. Of course, it also did not help the dollar that U.S. Treasury bond yields (to which it usually shares a positive correlation) traded lower yesterday and dragged it down too.

But don’t fret! Today, a couple of events are due to be released from the U.S. which could provide the dollar with support. At 2:00 om GMT, the existing home sales report is expected to print at 5.15 million. Then at 6:00 pm GMT, the minutes of the most recent FOMC meeting will be released.

The report will be closely watched as it is the last statement from the Fed before the September meeting. Should it show that more Fed officials are in favor of tapering, we could see the dollar rally! But if not, we’ll probably see the currency extend its losses. Watch out!

1097

Dollar domination! Thanks to the FOMC’s meeting minutes, the Greenback was able to reign supreme in the foreign exchange market yesterday. The U.S. dollar index that tracks the performance of the currency versus the other majors rose to 81.79 from 81.37.

The FOMC’s meeting minutes seem to suggest that the central bank is on track to taper its bond buying program before the year ends. Even though it showed that a few policymakers were cautious and wanted to see more economic data before making a final decision, the majority said that it “might soon be time” to slow purchases. Economists and analysts predict that tapering could come as early as next week.

On the economic front, the Existing Home Sales also supported the Greenback’s rise. It came in significantly better than expected, printing a 5.39 million figure versus the 5.15 million forecast. It posted its highest rise since 2009, indicating that the housing market is gaining momentum.

Today, only the unemployment claims report is scheduled to come out of the U.S. It’s going to publish at 12:30 pm GMT and it is anticipated to post a 329,000 reading, which is slightly higher than the previous week’s 320,000. The report has been causing a lot of volatility as of late, so it’d be best to pay attention to the actual results. Good luck trading today folks!

1098

Although the dollar didn’t have the most impressive economic reports to back it up, it managed to gain ground against most of its major counterparts. It strengthened against the yen, Swissy, pound, Kiwi, and Loonie. Meanwhile, it ended unchanged against the euro, but it weakened against the Aussie.

The U.S.'s streak of strong unemployment claims numbers finally came to an end as weekly jobless claims came in at 336,000, surpassing forecasts that called for a record of 329,000. The good news is that although claims did not meet expectations, the downtrend remains intact and its 4-week moving average is now at a 5-year low.

In other news, the flash manufacturing PMI was also unable to match the market’s high expectations. The index climbed from 53.7 to just 53.9 amidst forecasts that called for a reading of 54.1.

Y’all should also take note of U.S. Treasury yields, as they seem to be affecting the forex markets quite strongly. With the markets expecting Septaper, yields have been on the rise and the 3% level is now within striking distance. In turn, this has translated to a stronger demand for the dollar. Don’t be surprised to find the Greenback broadly higher if yields continue rising!

On tap today, we have the U.S. new home sales report at 2:00 pm GMT. Look for it to show a slight decrease from 497,000 to 487,000.

1099

Due to the abysmal results of the new home sales report, the U.S. dollar was let go in favor of other currencies. The U.S. dollar index that measures the performance of the currency versus the other majors tripped to 81.82 from 81.95.

As I mentioned, the U.S. new home sales report was extremely disappointing. It showed that the annualized number of new homes sold that was sold in July was only at 394,000, and not 487,000 like what the market had initially expected. June’s figure was also revised down to 455,000 from 497,000.

The U.S. economic docket has a lot to offer us this week. I have listed the important ones below:

[I]Monday[/I]

Headline Durable Goods Orders: -0.3% forecast, 3.9% previous
Core Durable Goods Orders: 0.6% forecast, -0.1% previous

[I]Tuesday[/I]

CB Consumer Confidence Survey: 79.6 forecast, 80.3 previous

[I]Wednesday[/I]

Pending Home Sales: 0.2% forecast, -0.4% previous

[I]Thursday[/I]

Preliminary GDP q/q: 2.3% forecast, 1.7% previous
Unemployment Claims: 329K forecast, 336K previous

As you can see, there are a lot of tier 1 reports coming out. Pay special attention to the Q2 preliminary GDP, as the result could determine the timing of the Fed’s tapering. A strong figure could cause the Fed to go ahead with tapering in September while a weak figure could force the Fed to taper in December instead.

1100

Up, up, and…nope! Just when the dollar was gaining momentum for a positive day, weak U.S. reports popped up and rained on its parade. How did that happen?

The dollar started the day on the right side of the charts as traders continued to cautiously buy the dollar in the hopes that the Fed would taper its asset purchases in September.

Too bad that the sentiment didn’t hold until the end of the day! The dollar bears rushed in during the U.S. session after figures for the U.S. durable goods orders showed surprising weaknesses. The headline figure dropped by a ridiculous 7.3% when only a 3.0% decline was expected, while the figure excluding transportation items also dropped by 0.6% in July when a 0.6% uptick was expected.

Will today’s reports continue to weaken the investors’ arguments for a “Septaper?” At 1:00 pm GMT the S&P home price index is scheduled for release, which will be followed by the CB consumer confidence index and Richmond manufacturing index at 2:00 pm GMT.

All these reports are expected to print slightly lower than their previous releases, so prepare for a possible dollar weakness scenario! Of course, it goes without saying that you should also be ready in case these reports surprise to the upside!

1101

When traders are risk averse, the dollar rules! Higher-yielding currencies continued to slide down against the safe-haven Greenback, with EUR/USD dipping to a low of 1.3325 and GBP/USD falling below the 1.5500 mark.

As it turns out, the worsening tension in Syria is giving a lot of traders the goosebumps, as the possibility of a full-blown war in the region could hurt oil supply and overall economic growth. With that, investors ramped up their holdings of less risky assets, such as the lower-yielding Greenback and gold.

Data from the U.S. came in better than expected, also providing more support for the U.S. dollar. The Richmond manufacturing index climbed from -11 to 14, which reveals that the industry expanded this month. On top of that, the CB consumer confidence index jumped from 81.0 to 81.5, outpacing the consensus at 79.6.

For today, U.S. pending home sales data is up for release and it will be interesting to see if the recent rise in mortgage rates continued to weigh on home purchases. After falling by 0.4% in June, pending home sales are expected to rebound by 0.2% but another negative reading could spark further risk aversion. Also due today is the crude oil inventories report, which should show if the conflict in Syria is starting to hurt oil stockpiles. Stay tuned for these releases starting 3:00 pm GMT!

1102

Who’s your daddy? Despite the bad U.S. housing figures, theGreenback still managed to show the foreign exchange market who’s boss byreigning supreme over other big currencies. The U.S. dollar index that tracksthe performance of the Greenback versus major currencies like the euro and theyen climbed to 81.90 from 81.61.

The July pending home sales report that was releasedyesterday showed a 1.3% decline, which was opposite the 0.2% gain the markethad initially expected. It was also considerably lower than 0.4% drop seen themonth before.

The Greenback has a big day ahead as two key reports are scheduledto be released, both at 12:30 pm GMT. The first one is the Q2 Preliminary GDP figures.It’s projected to show that the economy expanded 2.2% after growing 1.7% in Q1.The second one is the weekly jobless claims report. The consensus is 330,000,which is slightly lower than last week’s 336,000.

1103

Back-to-back, baby! For the second day in a row, the Greenback showed the markets who’s king of pips as EUR/USD, GBP/USD, and USD/CHF all showed dollar strength. What the heck brought this on?!

Blame it on better-than-expected U.S. reports! A second reading of the U.S. GDP revealed a significant upward revision, showing Uncle Sam’s Q2 2013 growth at 2.5% instead of the 1.7% growth that the advanced GPD revealed.

The initial jobless claims also came in at 331,000, which is a tad bit lower than last week’s 337,000. With great economic results like these, the Fed has even less reasons to avoid tapering its asset purchases next month!

The last wave of U.S. data this week will be delivered in batches, starting with the core PCE price index and personal income and spending data at 12:30 pm GMT, followed by the Chicago PMI and revised UoM consumer sentiment data at around 1:45 to 1:55 pm GMT. These reports are generally expected to print the same numbers as last month, but don’t discount the possibility of upside or downside surprises!

1104

The U.S. dollar put its game face on last Friday, as risk aversion extended its stay in the markets. EUR/USD dipped below the 1.3200 handle while GBP/USD tumbled to a low of 1.5461. What’s in store for the Greenback today?

Data from the U.S. came in mixed last Friday, as consumer sentiment turned out better than expected while personal spending and income missed expectations. The UoM revised consumer sentiment figure climbed from 80.0 to 82.1, higher than the estimate at 81.2, reflecting stronger confidence among U.S. consumers. However, personal spending and income ticked up by only 0.1% instead of the estimated 0.3% increase for August.

The core PCE price index, which is rumored to be the Fed’s preferred inflation measure, also came up short. The actual figure came in at 0.1%, half of the estimated 0.2% uptick in price levels.

Despite mostly weaker than expected data from the U.S. though, the dollar was still able to stay on top of its game at the end of the trading week as worsening tensions in Syria kept risk-taking at bay. For now, U.S. President Obama is seeking approval from the Congress on military air strikes in the country.

Take note that U.S. traders are on holiday today in celebration of Labor Day. The lower level of liquidity in the markets could mean more pronounced reactions to market catalysts and therefore higher volatility. Since there are no reports from the U.S., make sure you stay on your toes for any market updates that could affect risk sentiment!

1105

That’s how it’s done! The Greenback posted gains against its counterparts yesterday despite the release of better-than-expected data from other economies and the lack of data from the U.S. What’s up with that?!

The U.S. traders were out celebrating Labor Day holiday yesterday, but that didn’t stop the dollar bulls from charging up the charts. USD/JPY and USD/CHF, and even EUR/USD showed dollar strength despite the lack of data from the U.S.

Could it be due to speculations of a Septaper? Well, we certainly can’t discount start-of-month positioning. In addition, some analysts are saying that rising tensions in Syria are to blame for the lack of positive momentum for the higher-yielding currencies.

We’ll know more about what drives the dollar’s price action today when traders from the U.S. join us after the holiday. Not only that, but the ISM manufacturing PMI is due at 2:00 pm GMT, along with the construction spending and the IBD/TIPP economic optimism numbers.

With the Fed’s “Septaper” decision only days away, all major U.S. reports will likely be closely watched. Don’t be left behind and prepare well for possible volatility surrounding the PMI data!

1106

Out of the way! Greenback comin’ through! It seemed like nothing could stand in the way of the U.S. dollar’s rally yesterday, as both fundamentals and risk sentiment provided support for the safe-haven currency. EUR/USD dipped to a low of 1.3139 while USD/JPY spiked up to a high of 99.86.

U.S. traders fresh from their Labor Day holiday returned to their desks during yesterday’s New York session and started loading up on their risk-off positions amidst the uncertainty surrounding the potential military strike in Syria. Aside from that, stronger than expected U.S. ISM manufacturing PMI, which climbed from 55.4 to 55.7, also gave the U.S. dollar a boost.

The U.S. is set to print its July trade balance at 1:30 pm GMT today and possibly show a wider deficit of 38.7 billion USD compared to the previous month’s 34.2 billion USD shortfall. This would reflect a decline in export activity and, if the actual deficit is larger than expected, it might force the Greenback to return some of its recent gains.

The bigger mover for the dollar could be today’s release of the Beige Book report. Remember that this report usually provides a closer look at how the U.S. economy is performing based on the reports of Fed districts. In the past, the Beige Book has reflected mixed performance across the different areas and sectors, which suggests that signs of improvements in all districts this time could be very positive for the dollar. Watch out for that at 7:00 pm GMT!

1107

Guess who’s back? No, it’s not Slim Shady. It’s the dollar bears yo! The Greenback posted small losses against the euro and pound yesterday on the back of mixed data from the U.S. What gives?!

The Greenback started falling in the early London session after data from major economies like the U.K. and the euro zone encouraged risk-taking. It also didn’t help the low-yielding currency that Uncle Sam’s trade deficit had widened from 34.5 billion USD to 39.1 billion USD. Apparently, strong demand from the U.S. and weak demand from the other major economies boosted imports and weighed on the U.S. exports.

The IBD/TIPP economic optimism report also missed expectations by clocking in at 46.0 instead of the 46.2 reading, while the Beige book report barely inspired any volatility in price action.

Today’s a big day for dollar traders as the Challenger job cuts data at 11:30 am GMT opens the salvo of a jobs-related data dump. Next up is the ADP report at 12:15 pm GMT, followed by the initial jobless claims at 12:30 pm GMT and the ISM non-manufacturing PMI and factory orders reports at 2:00 pm GMT. The reports are generally expected to show weaker numbers from last month, so you better make the appropriate adjustments to your trading plans!

1108

Will the non-farm payrolls release make or break the dollar’s rally? The Greenback was able to rake in more gains against most of its major counterparts yesterday, as USD/JPY jumped above the 100.00 mark while EUR/USD dipped to a low of 1.3110.

Strong U.S. ISM non-manufacturing PMI allowed the Greenback to extend its gains against its currency rivals in yesterday’s trading, as the actual figure climbed from 56.0 to 58.6 instead of falling to the estimated 55.2 reading. This shows that the non-manufacturing sector expanded at a much stronger pace in August, hinting at good growth prospects for the U.S. economy.

For today, the price action of dollar pairs could revolve around the NFP release during the U.S. session, as this report is expected to provide more clues on whether the Fed is likely to push through with the Septaper or not. Analysts are expecting to see a 178K increase in hiring for the month, higher than the previous month’s 162K figure and just enough to keep the jobless rate steady at 7.4% for August. The report is due 1:30 pm GMT so you still have time to check out Forex Gump’s NFP predictions if you plan to trade this event!

1109

CRASH! The dollar fell across the board last Friday when the big U.S. NFP report turned out to be a disappointment. EUR/USD shot up by 57 pips, GBP/USD gained 41 pips, while USD/JPY had dropped by a whopping 107 pips.

The dollar pairs were happily trading on short ranges early in the day, but price action burst against the dollar’s favor when the U.S. printed its NFP report. The non-farm employment change only showed a 169,000 gain for the month of August, which is a heck of a lot less than the 180,000 figure that many had been watching for.

The jobless rate didn’t help the Greenback either. While the headline rate fell from 7.4% to 7.3%, investors believe that it was the significant drop in participation rate that influenced the downward move.

Will the scrilla catch a break this week? We won’t see any major data from Uncle Sam until Friday when the retail sales report is printed, so keep your eyes peeled for any news on how the latest jobs data affects the Fed’s resolve to start scaling back its asset purchases some time this year. Good luck and good trading!

1110

The Greenback was stuck in Loserville yesterday, as its major rivals took advantage of its post-NFP weakness. EUR/USD climbed to the 1.3250 area while GBP/USD reached the 1.5700 level. Will the Greenback have a chance to bring sexy back?

After the NFP madness last Friday, the U.S. dollar was left with no major reports to rely on yesterday. The only report released was the U.S. consumer credit figure, which printed a 4.4% increase to 10.4 billion USD for July. This was weaker than the estimated rise to 12.7 billion USD while the June figure was revised lower from 13.8 billion USD to 11.9 billion USD, reflecting a downturn in consumer spending and confidence.

Once again, there are no major reports due from the U.S. today, as the only piece of data due is the NFIB small business index. This report measures the economic conditions for small businesses, based on several indicators such as hiring, inventories, sales, and earnings. An improvement from 94.1 to 94.8 is eyed, but another weaker than expected reading might hurt the Greenback.

As always, stay on your toes for any updates on the situation in Syria and the potential U.S. military strike, as these could have a huge impact on market sentiment. Be careful out there!

1111

The dollar’s price action was as mixed as a bag of jellybeans as risk appetite dominated the markets. EUR/USD and GBP/USD continued to climb, but USD/JPY and USD/CHF both showed dollar strength.

There were no major reports released from the U.S. yesterday, so investors focused on trading the decreased risk of a military strike on Syria. This sparked risk appetite across the board, which boosted high-yielding currencies and even lifted the dollar against low-yielders like the franc and the yen.

With Obama officially pausing calls for a strike in Syria, we might see more risk appetite-related moves on the dollar pairs. Of course, you also can’t discount possible currency-specific moves!

1112

Somebody call a professor because the Greenback just got schooled! The U.S. dollar chalked up another losing day to its major currency rivals, as EUR/USD jumped above the 1.3300 handle while GBP/USD started trading above 1.5800. What’s in store for the dollar today?

The lack of major economic reports from the U.S. left the Greenback with nothing to draw support from, and it didn’t help that the safe-haven currency was already feeling helpless in the middle of ongoing risk rallies.

For today, the U.S. has a few medium-tier releases scheduled, namely the weekly initial jobless claims, import prices data, and the Federal budget balance. Initial jobless claims could increase from 323K to 332K, as a lower than expected reading might provide some short-term support for the Greenback. Import prices are projected to have increased by 0.6% in August, a faster pace compared to July’s 0.2% uptick.

Also scheduled today is Fed official Dudley’s speech at 2:00 pm GMT. Based on his speeches over the past couple of months, Dudley supports Bernanke’s view that the Fed should start moderating its bond purchases towards the end of the year, as the U.S. economy has already shown some improvements in hiring and inflation. Reiterating his pro-taper stance could remind traders that the Septaper is still a go and possibly give the dollar a boost.

1113

It was a fierce match between the dollar bulls and bears yesterday as currency-specific factors played into different major pairs. EUR/USD and GBP/USD showed small losses while USD/JPY fell by 40 pips. Did the U.S. reports play any part in it?

Yesterday Uncle Sam’s initial jobless claims came in at 292K, down from last week’s 323K. The slide was influenced by a change in the computer networks of two states though, so the figure was taken with a grain of salt. The dollar also had minimal reaction to the Federal budget balance report, which came in at -147.9B USD instead of the expected -97.6B USD figure.

Unfortunately for dollar traders, the major currency pairs were also influenced by currency-specific factors. For instance, the euro fell across the board on weak economic reports while the Aussie took a huge hit thanks to a grim employment report.

Today’s a big day for reports in the U.S. as the retail sales data is due for release. Market geeks are expecting the headline retail sales to jump by 0.5% after rising by 0.2% and the core figure to show a 0.3% uptick against last month’s 0.5% growth. The PPI report also due at 12:30 pm GMT is also expected to show a slight improvement.

At 1:55 pm GMT we’ll see the preliminary UoM consumer sentiment report. Last month the data missed expectations so badly that it weighed on the dollar. This time around analysts expect a reading of 82.6, up from last month’s 82.1.

1114

It looks like the Greenback is off to a weak start! After finishing Friday with a few losses against some of its major counterparts, the U.S. dollar gapped down over the weekend. What’s that all about?!

U.S. data was mostly weaker than expected last Friday, with the retail sales figures coming in below consensus. The headline retail sales report for August printed a 0.2% uptick instead of the estimated 0.5% increase while the core version of the report showed a 0.1% rise instead of the projected 0.3% growth. Although the July figures were revised a bit higher, the bleak consumer spending reports cast doubts on the Fed’s Septaper plans for this week.

The PPI reports came in mixed, as the core figure printed a flat reading while the headline figure showed a stronger than expected 0.3% increase. This reveals that producer price inflation is still weak and that this might carry on to overall inflation later on.

Meanwhile, the consumer sentiment figure measured by the University of Michigan also printed disappointing results, as the actual reading slipped from 82.1 to 76.8 for the month of August. This shows that consumer confidence dropped last month, possibly an effect of the weaker performance of the U.S. economy.

This week is bound to be an exciting one for the Greenback, as the Fed is set to make its interest rate decision on Wednesday. I’m sure everyone and his momma is excited to find out whether the Fed will taper or not, as market watchers are probably starting to price in their expectations as early as today!

As for economic data, only a few reports are on tap for today. These are the Empire State manufacturing index, which is slated to improve from 8.2 to 9.2, and the industrial production report. Watch out for these releases starting 1:30 pm GMT, as weaker than expected data could fuel the dollar selloff.

CPI reports are due tomorrow while building permits and housing starts data are due on Wednesday, along with the FOMC statement. Thursday has the initial jobless claims and existing home sales figures on schedule while Friday is filled with speeches from FOMC members George, Tarullo, and Bullard.

Better do your homework and read up on what’s expected for the upcoming U.S. events this week!