how much can u tel me 
Ho hum, quiet trading for most of the majors yesterday. Save for the USDCAD and GBPUSD, the rest of the pairs were range-bound since the US economic schedule was relatively light. Still, the USD was able to lock in humble gains as investors took some profits off the table.
The only report on Tuesdayâs schedule was the gauge of economic optimism, which remained below the 50.0 mark. The reading for November stood at 47.9, lower than Octoberâs 48.7, indicating that consumers are still pessimistic about economic conditions.
Words from FOMC members Dennis Lockhart and Janet Yellen were far from upbeat as well. Both cautioned that unemployment would remain high for the succeeding years since economic growth wouldnât be strong enough to spur hiring. According to Yellen, the weak labor market and tight household budgets are two of the major hurdles to economic recovery. She expressed her concerns on whether the economy will be able to stand on its own, without the help of the governmentâs stimulus programs.
Low volatility may be in the cards for today as most US and Canadian traders are off on a Veterans Day holiday. Except for the GBPUSD, which could set off fireworks after the release of UKâs claimant count change and inflation report, the major currency pairs could keep ranging since the US economic schedule is report-free for the day.
Most of the majors turned on their snooze mode yesterday as the US observed Veterans Day. Given lack of economic flows, the USD was able to rebound against its counterparts to end the session. The USD Index, which measures the performance of the USD relative to a basket of currencies including the EUR, JPY, GBP, CAD, CHF and SEK, gained by as much as 0.3% before closing higher by 0.1%.
No economic reports were due in the US yesterday. Despite this, the S&P 500 was able to mark a new 13-month high to 1,098.51 due to the 16.1% surged in Chinaâs industrial production. Since China is one of USâs major trading partners, a growth in its industrial production could benefit USâs exports. This growth in Chinaâs sector also pushed the AUD to its new yearly high against the dollar to 0.9344. Trading, though, was very tight for the most part of the day. As mentioned earlier, the USD was able to make up for some of its losses against the other majors to close the day.
In the mean time, initial jobless claims for the week ending November 7 is going to be released today at 1:30 pm GMT. The number of people who have applied for unemployment benefits for the first time during the last week is expected to stay flat at 512,000.
The Federal budget balance for the month of October will also be issued later at 7:00 pm GMT. This account measures the difference between the governmentâs income and expenditures during the month prior. Based on the forecast, the governmentâs budget deficit is seen to have ballooned to -$152.5 billion from -$46.6 billion. This means that the government needed to âborrowâ money by issuing new treasuries to fund its spending that is not covered by its income. Investors could then lose some confidence on the USD given the increased level of government debt.
The dollar finally managed to post some significant gains in yesterdayâs trading session. The pause in dollar selling was attributed to Chinese Premier Wen Jiabaoâs warning that the world faces an uneven recovery.
US Treasury Secretary Tim Geithner also provided the dollar with much needed support. He said that a strong dollar is needs to be upheld during this time and that the US government is determined to make sure that its budget deficit is put under control. This is quite ironic, given that the Federal Budget Balance released a couple of hours ago showed that the governmentâs deficit in October grew to a whopping $176.4 billion from $46.6 billion the month prior.
However, some believe the dollarâs move yesterday was simply a technical retracement, as it was in deeply oversold territory. According to them, the move yesterday will simply give a chance for dollar bears to buy the dip.
The initial jobless claims posted its best reading since January this year yesterday, indicating the job losses are starting to slow down. It reported that 502,000 Americans claimed for unemployment insurance for the first time for the week ending November 7, lower than the 512,000 initially expected.
The reports to watch out today are the US trade balance (1:30 pm GMT) and the University of Michigan Consumer Sentiment Survey (2:55 pm GMT).
The trade balance, which measures the net difference in value between imported and exported goods and services, is predicted to show that the US trade gap widened to -$31.8 billion in September from -$30.7 billion in August as demand for imported cars and oil picked up.
Meanwhile, the UoM Consumer Sentiment Survey is expected to show that consumers grew more optimistic this month. The forecast is a reading of 71.1, which an improvement from last monthâs revised up reading of 70.6. Increasing optimism is seen as a sign that spending might soon pick up because people tend to spend more if they are more confident about the economy and their financial standing.
Looks like Thursdayâs dollar buying was just indeed a technical retracement, as the dollar fell once again on Friday. The dollar fell as risk sentiment picked up on some nice earnings results from US companies.
The trade balance came in to show that the deficit grew more than expected, widening to $36.5 billion in September after sitting at $30.7 billion in August. This marked the largest monthly increase in 10 years. The University of Michigan consumer confidence index dipped to 66.0, way down from Octoberâs reading of 70.6. The index was hurt by the current state of employment. Many believe that the unemployment rate has yet to top out, leaving unemployment as the number one concern forconsumers.
Still, the markets focused mainly on the earnings reports, ignoring the poor data. This left the dollar lagging behind against most other majors.
In other news, Warren Buffet said in an interview that âbusiness have bottomed outâ and that economic recovery would need two years. After posting some growth this past quarter, many âexpertsâ have said that the economy could be fully recovered by next year. Buffet also said that the US government needed to get its balance sheet in shape and that it cannot keep running up the debt. Considering that Buffet is the 2nd richest man in the world and probably the greatest investor of all time, Iâll be keeping this in mind over the next year.
Iâm looking forward to the US session later today, when retail sales data along with the Empire State manufacturing index will be available at 1:30 pm GMT. The headline retail sales report is expected to show sales growth of 1.0% from September to October, while core sales is projected to have increased by 0.4%. The manufacturing index on the other hand, may dip from 34.6 to 29.9. Will this cause risk aversion to come back into play? Or will traders ignore economic data and continue to sell the dollar?
Also, weâll know more about business inventories levels when a report comes out at 3:00 pm GMT. Initial predictions are saying that inventory levels have been cut by an additional 0.7% during the month of September. Take note that during this recession, companies have been cutting inventory levels in order to curb expenses and match it to demand.
Lastly, Fed Chairman Ben Bernanke will be speaking about the economic outlook in a forum at 5:00 pm GMT. Will Bernanke express more cautious optimism? Watch out for his speech and stay on your toes!
A couple of nasty spikes could be spotted on most of the major pairsâ charts as a bunch of news reports shook the USD. At the end of the day, the USD closed lower against its counterparts, pushing the USD index to its 15-month low.
In his speech yesterday, Federal Reserve Chairman Ben Bernankementioned that the Fed will employ policies to ensure that the USD remains strong. The USD rallied in an instant but returned its gains later on as Bernanke spoke about his pessimistic outlook for the US economy. Traders took his downbeat remarks as a sign that the Fed would hold on to their monetary stimulus much longer than expected, thus causing the USD to lose ground.
On the economic front, data was disappointing as retail sales surged by 1.4% but core retail sales posted a mere 0.2% uptick in October. Underlying data shows that car purchases account for much of the increase in retail sales. In addition, September retail sales figures were revised downwards from the previously reported 1.5% decline to a whopping 2.3% drop.
Meanwhile, the Empire State manufacturing index slid from 34.6 to 23.5 in November, signaling that the pace of growth in manufacturing is starting to slow down. Components of the report show that indexes for employment and new shipments fell significantly.
Moving on⊠The US economic schedule is fully-loaded again today as it has PPI figures, TIC long-term purchases, and industrial production data on tap. Producer prices are expected to climb by 0.6% in October after sliding down by 0.6% in September. TIC long-term purchases are estimated to be at 27.3 billion USD in September, a notch lower than Octoberâs 28.6 billion USD. Lastly, October industrial production is projected to rise by 0.4%, slightly moderated from the 0.7% increase in September. These data will be reported starting 1:30 pm GMT.
Despite the having several weak economic reports, the US equities markets still managed book new yearly highs. The Dow closed 0.29% higher at 10,437.42. The broader S&P 500 also inched higher to 1,110.32. Interestingly, the USD fashioned a broad-based rally against the other major currencies as well.
The US session opened in the red territory as the countryâs PPI came out less than expected. Producer prices in the US rose by 0.3% on higher energy and food costs in October after falling by 0.6% in the month prior. The increase, however, is below the 0.6% consensus. The core account, which excludes energy and food costs, declined further by 0.6%. The weak PPI figures could reflect on the CPI as well. Some economists say that the still low demand plus a record excess in capacity will prevent producers to transfer the jump in commodity prices to consumers. Hence, a sharp rise in the longer term inflation could be unlikely. Still, the frail numbers could indicate a relatively pale consumption over the short term.
Meanwhile, industrial production in the US eased in October as it only rose by 0.1%. Demand for automobile have declined due to the expiration of the governmentâs âCash for Clunkersâ program which gives buyers rebates if they trade in their old vehicles for new ones. The expiration of the program effectively reduced the demand for production equipments.
Today, data on US housing starts and building permits for the month of October will be due at 1:30 pm GMT. Building permits are seen to rise to 590,000 from 570,000. Housing starts are also projected to increase to 610,000 from 590,000. Note that the deadline to avail of the governmentâs tax subsidy for first-time home buyers ended in October. Hence, we could say that the housing sector could stand on its own at least in the period covered without any substantial support from the government.
The USâs CPI figures will also be released at 1:30 pm GMT today. The headline CPI for the month of October is estimated to remain the same at 0.2% while the core figure is seen to slow to 0.1% from 0.2%. Demand and spending, however, could peak as early as October as we enter the holiday season. So it is probable also that inflation could slowly increase at least for the remaining months of this year.
If the negative correlation between the USD and risk appetite remains, then the above could be bearish for the USD.
The USD traded in a mixed manner against other major currencies in yesterdayâs trading session. It generally gained versus the commodity-based currencies like the AUD, NZD and CAD but lost against the EUR and the CHF.
US economic data that came out yesterday was also varied. The report on building permits and housing starts for the month of October came in lower than expected, printing an annualized rate of 550,000 and 530,000, respectively. The forecast was for building permits to grow to 590,000 and housing permits to rise to 610,000. Some analysts say the sharp fall in both the building permits and housing starts to the expiration of the government program that allows a $8,000 tax credit for first-time buyers of homes.
The US consumer price index was a little bit more positive. The headline CPI, which measures the monthly change in the prices of goods and services purchased by consumers, stood at 0.3% in October, from 0.2% the month prior. The core version of the report, which excludes food, oil and energy, remained at 0.2%. The CPI report is important because it is one of the primary tools the Fed to determine the countryâs inflation rate.
Two reports to watch out today: the usual jobless claims report at 1:30 pm GMT and the Philly manufacturing index at 3:00 pm GMT. Jobless claims are expected to rise slightly to 503,000 the week ending Nov. 13 from 502,000 the week prior. On the other hand, the Philly manufacturing index is predicted to print a reading of 12.3 for this month, which, if holds, would be an improvement from the 11.5 reading in October. Since the figure is greater than base line 0.0, it means that the manufacturing industry is improving.
The USD dominated against most majors in yesterdays trading as risk aversion seems to be creeping back in. The USD did especially well against the com-dolls (AUD, NZD, CAD), while also getting some decent hits in on the GBP and EUR. Will dollar dominance continue today? Or will we see traders change their mind as we enter the weekend?
Unemployment claims came out in line with expectations, printing that initial jobless claims for the week of November 14 were at 505,000. This was at par with the previous weekâs figure of 502,000. Seeing that unemployment claims held at a 10-month low for the 2nd consecutive week, some say that this could be taken as a sign that the firings may be levelling off.
The Philadelphia Fed manufacturing index printed a reading of 16.7, rising for the 4th consecutive month. It had printed a reading of 11.5 last October. One of the key indexes that improved was the employment index, which rose to a negative 0.5%. Could it be that the job market is truly levelling off? While there have been some signs of improvements, many believe that it has yet to peak and that there could be more weakness in the future. Only time will tell.
Yesterday also featured the beloved US Treasury Secretary Tim Geithner. At a small businesses conference in Washington, Geithner called out US banks to boost lending to small business and everyday consumers. He said that lending conditions still remain tight and that banks have an obligation to help small communities. Geithner warned that without growth in consumer spending and small businesses, overall growth would be put at risk and that recovery would be harder to achieve.
As you can see, the run off to the dollar wasnât caused by any rim-rocking economic data. Rather, it appears that traders are becoming more cautious and wanting to take some risk off the board. Could this just be a case of some profit taking? With no other economic data coming out from the US, letâs see if trading is unexpectedly quiet to end the week.
Big Ben Bernanke mustâve been rejoicing last week as the market heeded his calls for a stronger USD. The USD managed to close higher against the major currencies, except for the JPY. But would it be able to hold on to its gains this week?
The Thanksgiving holiday may be fast approaching but the US economic calendar remains busy as usual. Today, data on existing home sales are due at 3:00 pm GMT. For the month of October, existing home sales are expected to be at 5.71 million, a few steps higher than Septemberâs 5.57 million. If the actual figure beats the consensus, then fundamental strength could push the USD even higher.
Tomorrow has the US preliminary GDP on tap. A downward revision is expected for the Q3 GDP, which was previously reported to be 3.5%. Due to the widening trade deficit, actual economic growth is estimated to be only 3% for the third quarter. Also due tomorrow is the CB consumer confidence index and the minutes of the latest FOMC meeting. The index of consumer confidence is projected to slide down a notch from 47.7 to 47.6 in November.
Durable goods orders data are on Wednesdayâs docket. Orders for durable goods are estimated to rise by 0.5% in October while core durable goods orders are expected to climb by 0.8%. Data on new home sales for October, which could print a modest improvement over Septemberâs 402K, are also on Wednesdayâs agenda.
Liquidity may be down on Thursday and Friday as the US traders go off on their Thanksgiving holiday.
Better-than-expected US existing home sales plus some dovish comments by two Fed officials stirred a USD sell-off in yesterdayâs trading. The USD fell across the board, with the dollar index closing at a 0.6% loss.
The US capitals markets put on a strong rally yesterday given the 10.1% m/m jump in existing home sales in October. The number of existing homes that were sold in October rose to 6.10 million from 5.54 million. It was only seen to rise to 5.71 million. Note that the governmentâs $8,000 tax subsidy for first-time home buyers will expire this December and people can avail of the program only up to October. This could be the reason behind the jump in sales.
Meanwhile, dovish comments from Chicago Fed President Evans and St. Louis Fed President Bullard did not help the USDâs cause. Evans noted that the Fed would likely keep its rates at a near-zero level until next year. Bullard, on a separate note, also said that the Fed would probably keep its debt-buying program active until mid of 2010.
The USD sunk following the reports.
Today, the US will publish its preliminary 3Q GDP at 1:30 pm GMT. Last month, the government reported a 3.5% growth in the countryâs GDP. This growth, however, is seen to be downgraded to 2.9% due to the massive cuts in inventories. Volatility is expected around the time of the release so be on the lookout. Better-than-expected growth would likely be bullish for the capitals markets and other higher yielding currencies but bearish for the USD.
The CB consumer confidence will also be released today at 3:00 pm GMT. The index is anticipated to fall by a hair to 47.6 from 47.7. Confidence, as measured in this index, has been falling for the past couple of months. Pessimism in the markets could ensue if the decline continues.
Lastly, the FOMC will issue the minutes of their last meeting at 7:00 pm GMT. The report will contain the details of their last decision.
The dollar managed to hold its ground yesterday as it generally closed the US session near its Asian open price. Are the dollar bears simply revving up for another drastic move today? With the amount of data on deck, we could be in for some major action once the US session opens.
No surprise with the US GDP report released yesterday. Although slightly lower than forecast, the US GDP growth for the third quarter of 2009 was revised down to 2.8% from the initial reading of 3.5%. Digging deeper into the report would reveal the downward revision was caused by the sharp rise in imports. In fact, it jumped almost 21%, the biggest quarter-on-quarter rise in 24 years.
The CB consumer confidence survey gave out a nice surprise. It showed that consumers grew more optimistic about the economy. It printed a reading of 49.5, which is higher from Octoberâs revised up reading of 48.7. The survey showed that although consumers were still concerned about the current status of the job market, they were more confident about the future of the economy.
The Fed seems to share the same opinion. The FOMC meeting minutes released yesterday indicated that they, too, are very concerned about the weak job market. The Fed sees unemployment staying within the 9.3%-9.7% during the fourth quarter this year. However, they are a bit more optimistic about economic growth. The Fed believes that the economy would continue to show growth all the way to 2012.
Today will be another fun-filled day as there is a huge amount of data on the countryâs economic cupboard.
At 1:30 pm GMT, expect to see the reports on durable goods orders, the weekly jobless claims and consumer spending.
The estimate is that durable goods orders report for October would show a rise of 0.5% while the core version, which excludes vehicles and airplanes, would show an increase of 0.7%. Goods are considered durable if their life span is more than three years. Currency traders tend to see rising durable goods orders as a sign of increasing economic activity and more traffic. Hah.
Meanwhile, the weekly jobless claims expected to show that 500,000 people claimed unemployment insurance for the first time for the week ending in Nov. 20. Although still astronomically high, the underlying trend in jobless claims is decreasing. Claims have consistently declined since its March highs⊠Then again, it might just mean that there are just no more jobs left to cut!
Thereâs also the report on consumer spending. The forecast is that consumer spending grew 0.6% in October, opposite the 0.5% decline seen in September. Since consumer activity makes up more than two-thirds of economic activity in the US, traders usually believe increased spending as a sign of improving economic conditions.
But wait, thereâs more! How clichĂ©âŠ
Anyway, at 2:55 pm GMT, await the revision on the University of Michigan consumer sentiment survey. The expectation is for the initial 66.0 reading seen two weeks ago to be revised up to 67.1. The UoM consumer sentiment survey is pretty much on the same boat with the CB consumer confidence survey. Improving reading means that consumers are being more optimistic about the future of the economy.
And lastly⊠yes, this is the last, I promise⊠thereâs the new home sales report at 3:00 pm GMT. The annualized number of new home sales in October is expected to have risen to 408,000 from 402,000 the previous month. If the actual figure comes out higher, we might see the dollar be sold off because of risk appetite.
Phew, that was a buy one. Get it? Buy is long⊠trading⊠Yeah, whatever.
Dollaâs going down, down⊠down, down⊠It certainly seems that way, as the USD hit a 15-month low and fell across the board. Looks like Ben Bernanke isnât getting his wish of a strong USD and has nothing to be thankful for this Thanksgiving â ha!
A slew of data was released yesterday, so be prepared for another long post. I know I am â I just had a double shot espresso! Letâs do this!
Dollar bears are on a roll, as risk appetite ruled yesterdayâs trading session. Investors and traders looking for higher yielding assets as economic data released yesterday gave more evidence that recovery is on the way. There was a nice surprise in the unemployment claims report, which printed claims for the week ending November 21 to be at 466,000. This was a nice improvement from the previous weekâs figure of 501,000. Some say that this could be an indication that reports next week will show that companies may have cut the fewest jobs in 20 months.
In other news, the University of Michigan consumer sentiment index was revised up from its initial reading two weeks ago. The index was revised to 67.4, up from the initial score of 67.1. Also, the housing industry is showing signs of improvement, as the annualized rate of new home sales rose by 6.2% to 430,000. It seems that everyone rushed to take advantage of government programs before they expired. Of course - consumers love the words âtax creditâ donât they?
Consumer spending also picked up in October, rising by 0.7%. This beat forecasts of a 0.6% increase. Coupling this with employment and rising sentiment, could this be a sign that consumers are now less worried about the state of employment and are now more willing to spend?
Interestingly however, this came on the heels of the durable goods report, which came in much worse than expected. Initial projections were calling for rise of 0.5% in durable goods order, while core goods â which doesnât include expensive items like airplanes and automobiles â would rise by 0.7%. However, yesterdayâs report showed that durable goods orders fell by 0.6%, down from Septemberâs revised 2.0% gain. At the same time, core goods orders fell by 1.3%.
Still, I was surprised to find that this didnât dampen risk appetite yesterday. Normally, this would have caused a run back to risk aversion. But yesterday? Nada. It seems that everybody is just a dollar bear right now and quite frankly, I donât blame them. There are growing concerns regarding the USâ deficit, low interest rates and diversification fears, all of which point to a bearish outlook for the dollar. This makes me wonder â Santa doesnât use dollars now does he?
And a happy Thanksgiving it was for the greenback! With most traders out enjoying their turkey dinners, liquidity thinned out and gave way to a strong one-way move yesterday. The greenback stayed on top of its game against most major currencies, except for the Yen - its safe-haven rival.
Even though the US economic calendar was on holiday mode, the greenback was able to benefit from risk sentiment. In fact, the greenback decided it was time to go out of its comfort zone and take cue from other economic reports apart from those from the major economies. And its country of choice? Dubai!
News of Dubaiâs credit problems, slated to be the largest sovereign default in almost a decade, hit the airwaves and caused quite a ruckus in the markets. Word on the grapevine is that Dubai begged for a âstandstillâ or an extension of their debt from international financial institutions. Credit-rating agencies, such as Standard and Poorâs and Moodyâs, were not to pleased with this. As a result, they lowered their ratings for state-run companies in case Dubai announces an official default.
Now, you may be wondering⊠How the heck does this concern the US?! Well, this event seemed to have triggered a wave of risk aversion in the markets. I mean, weâre talking about the worst sovereign debt default here! It just might give Argentinaâs sovereign debt a run for its money - metaphorically speaking, of course.
Anyway, the US economic calendar is empty again this Black Friday as most traders are still enjoying the holidays. But for those itching to catch some pips off the forex marketâs non-stop action, be mindful that thin liquidity is likely to cause high volatility!
The dollar bulls, turkeys⊠or whatever animal you want to call them took a break from their rampage last Friday. They erased some of their gains from Thursday as risk appetite improved slightly.
Since the US economic calendar was clear of any data, it seems that currency traders realized they overreacted on Dubai credit concerns and unwound some of their positions. The question to ask right now is this: Has the value of the dollar finally bottomed out or was the move last week simply a chance for dollar bears to sell at a much cheaper price? I wish I knew too.
This week will prove to be exciting for currency traders as the employment situation report for November is due on Friday! The most watched section of the report, the non-farm employment change, is predicted to show that net job losses in November eased to 111,000 from 190,000 the month prior. Meanwhile, the unemployment rate is expected to remain unchanged at 10.2%.
Of course, as a forex trader, youâre probably wondering how price would move upon the release of the report. In the past few releases, the employment situation report was followed by a strong move in one direction for a few minutes before fading out quickly after. With that said, watch out for those false breaks of support and resistance levels!
Anyway, Iâm getting ahead of myself⊠Let me get back on track⊠Seeing that a bunch of other data will be released before Friday.
Tomorrow, expect to see the ISM manufacturing PMI and the pending home sales report for November. Expansion in the manufacturing industry probably as the ISM manufacturing PMI is predicted to print a reading of 54.7 from 55.7 the month prior. It still means that the manufacturing industry is growing though, since the reading is above the 50.0. On the other hand, pending home sales is expected to have decreased by 0.2%. If the actual results of any of these come out higher, we might see risk appetite pick up and cause the dollar to lose some ground.
The ADP non-farm employment change, which is used as a leading indicator of the non-farm employment change, will be released on Wednesday. The estimate is 145,000 net jobs lost in November, down from last reporting periodâs 203,000 net jobs lost.
Speaking of employment, thereâs also the weekly report on jobless claims. The forecast is that 480,000 people claimed for jobless insurance for the week ending Nov 27.
Phew, thatâs about it for this week. Although there are a lot of reports due, we might see some ranging behavior as currency traders await the results of Fridayâs NFP report.
The dollar failed to make any significant directional move against other major currencies yesterday. This kept most currency pairs range bound, bouncing off the dayâs highs and lows.
The only data released from the US yesterday was the Chicago purchasing manager index for the month of November. The index is designed to determine whether manufacturers in the Chicago area are growing or shrinking. A reading above 50.0 means there is growth while a number below 50.0 means otherwise. The actual reading stood at 56.1, higher than the 53.4 forecast and an improvement from Octoberâs reading of 54.2. According to the index, the jump in business activity was caused by growing sales and increased international demand.
On todayâs economic cupboard weâve got the ISM manufacturing PMI for November and the Pending home sales report for October at 2:00 pm GMT.
Just like the Chicago PMI, the ISM manufacturing PMI determines whether the manufacturing industry is growing or not. The expectation is a reading of 54.8. Since Octoberâs reading stood at 55.7, economists are expecting that growth in the manufacturing industry to have slowed down in November.
Meanwhile, the report on pending home sales is expected to show a 0.4% decrease in sales October-on-September. Rising pending home sales is usually seen as good for growth because it sets off activity in different sectors of the economy â people are hired, mortgages are taken out, furniture is purchased, etc.
Risk sentiment has been generally pro-dollar since Thursday but if these reports come out grossly better-than-expected, we could see a reversal of this trend. Remember, sentiment can change on a dime so itâs to always best to be flexible!
Looks like investors and traders are over the Dubai scares, as risk was definitely in play yesterday. The USD fell against most other majors, with the EURUSD pair hitting as high 1.5100 and the CHF hitting parity against the dollar once again.
Risk was boosted from good news across the globe, as well relatively positive data that was released from the US. Due to consumers rushed to the finish line to avail of tax credit schemes that were expiring in October, pending home sales of existing homes rose dramatically last month. The index rose for the 9th consecutive month, increasing by 3.7% to have a reading of 114.1 â itâs highest level in 3 years and up 29% from last Octoberâs levels! This was a pleasant surprise, as it was expected that the index would fall by 0.4%. I expected we may just see that next month, when tax credits are no longer available. If only the real estate market had big discounts on Black Friday as well â ha!
The good mood yesterday wasnât even bothered by the ISM manufacturing index fell to 53.6, which was a slightly bigger drop than what was expected. Still, with the index above the make-or-break line of 50.0, the manufacturing industry expanded for the 4th month in a row. Take note that new orders and exports were two of the only components in the index to rise. Wondering why? Well it might have to do with all the dollar weakness we have been seeing. The weaker the dollar is, the more attractive it becomes to importers who want to buy US goods. This in turn helps prop up the US economy. Ironic eh?
We could be in for more some big splashes later today when the ADP employment report is released at 1:15 pm GMT. The ADP predicts that job losses will fall to just 149,000, down from the 200,000 level weâve been seeing the past couple of months. Also, set your alarm for 7:00 pm GMT, when the Fedâs Beige Book is released. The report includes analysis made by the FOMC with regards to the economy.
Tomorrow will also be pretty heavy, as the weekly unemployment claims and ISM non manufacturing PMI index will be available to the public. Will good results from these reports boost the risk once again? Well, I have a hunch that this data will have a mild effect on the market, as traders will be listening eagerly to Fed Chairman Ben Bernanke, who will be talking before the Senate Banking Commission at 10:00 am GMT regarding his nomination for another term as Fed head. With his term almost coming to an end, I wonder if even he wants to continue and push through for a second termâŠ
Ho hum, price action was relatively quiet yesterday as the majors consolidated ahead of the ADP non-farm employment reportâs release. A few hours after the release, the USD ended up slightly stronger than its major counterparts. How come?
Well, the ADP non-farm employment report showed that net job losses fell to 169K in November, which is a bit higher than the expected 149K increase in unemployment for the month. This weaker than expected report caused traders to be reluctant to take on more risk and stock up on the safe-haven USD instead.
On a more upbeat note, the ADP employment reading for October was revised from -203K to -195K, showing that net job cuts for the month were less than previously reported. Another employment report showed that job cuts fell by almost 72% from last year. However, these improved figures were not enough to stimulate investorsâ risk appetite.
The Fed was also particularly optimistic about the US economy as the Beige Book mentioned that economic conditions have improved modestly since the last report. Most districts reported an improvement in economic conditions while others said that conditions havenât changed. Consumer spending has picked up while manufacturing and housing continue to advance. Still, the Fed reiterated its pledge to keep interest rates at their low levels for an extended period of time. They also noted that credit conditions remain tight and that loan demand has weakened.
Today weâll take a look at the weekly unemployment claims and ISM non-manufacturing PMI. Initial jobless claims for the week are projected to be a bit higher than the previous weekâs 466K as it could print 479K in first-time unemployment claims. Another disappointing figure from the labor market could cause further USD buying. The actual figure is due 1:30 pm GMT.
The ISM non-manufacturing PMI is expected to show that the industry continues to expand as its reading for November could climb from 50.6 to 51.6. Watch out for that by 3:00 pm GMT.
Later on, Fed Chairman Ben Bernanke would testify on his nomination for a second term before the Senate Banking Committee confirmation hearing. Word on the grapevine is that the Fed Chairman could undergo some serious grilling today! So you better stay tuned for that around 3:00 pm GMT.
After a disappointing start, the dollar made a strong push during the last part of yesterdayâs session to end the day mixed. The dollar index closed with a 0.1% advance.
Initial jobless claims for the week ending November 28 came in much lower than the estimated 479,000. Claims fell to 457,000 from 462,000 that were logged in during the previous week. The latest tally is the lowest level since September 2008. The number of people who applies for insurance benefits are likely to go down as the economy improves.
Meanwhile, the non-farm labor productivity in the US during the third quarter was revised down to 8.1% to 9.5%. Still, this productivity level remains to be the best in about six years. A drop in productivity usually leads to inflation down the road because this translates to higher costs for the employers. These costs would then be transferred to consumers. In any case, productivity among laborers will likely stay at a high level given the scarcity of jobs at the present moment.
The results above would normally be bullish for the USD but the dollar still slid because of ECB President Trichetâs dovish remarks about the bankâs monetary policies.
Later in the day, the ISM services PMI came out with dismal figures. The index unexpectedly dropped below the 50.0 centerline to 48.7 from 50.6. The latest level now indicates contraction in the sector. This added more selling pressures on equities and other high yielding currencies which consequently boosted the USD further.
Today, several major economic accounts are due. The highly anticipated non-farm payrolls are projected to register about 119,000 lost jobs in November, which is much lower than the 190,000 count during the month prior. The nationâs unemployment rate, on the other hand, is seen to remain at 10.2%. Notice that the employment cuts are slowly improving by the thousands. If this trend continues, the overall unemployment rate would begin to better as well in the near future.
Data on US factory orders will also be released at 3:00 pm GMT. Orders are projected to post a marginal 0.1% gain in October after the 0.9% score during the previous month. We could be up for a positive surprise in this account as orders could have piled up as consumers looked ahead of the Christmas season.
Given the nature of these accounts, I remind you to be very careful with your trading positions as volatility will surely be on a high gear.
Volatility shifted into high gear last Friday as the dollar managed to stage a stellar rally on account of an exceptionally better-than-expected NFP report.
Price action last Friday was surprising, to say the least, as the dollar has the tendency to move opposite equities. Whenever âgoodâ and âpositiveâ economic reports come out, risk appetite develops, causing equities to rally and the dollar to fall.
The NFP report, which measures the monthly net change in number of people who got hired (or fired), surprised the markets and showed that ONLY 11,000 jobs were lost. The actual figure was quite a leap as traders were expecting that economy shed 119,000 net jobs in November. Employment in the US also improved, as joblessness eased to 10% in November from 10.2% the month before.
This weekâs high-profile reports are the following: Trade balance and unemployment claims (both due on Wednesday, 1:30 pm GMT), retail sales report (due on Friday, 1:30 pm GMT), preliminary University of Michigan consumer sentiment survey (due on Friday, 2:55 pm GMT).
The trade balance computes the difference in value between imported and exported goods in a given month. A negative balance means more goods were imported than exported. The forecast is that the US trade balance edged slightly higher to $37 billion in October from $36.5 in September.
Meanwhile, the unemployment claims for the week ending Nov. 5 would probably show 465,000 new claims, up from the week priorâs 457,000 figure.
The retail sales report is expected to lower too. The consensus is for a 0.6% climb in retail sales in November, down from the previous monthâs increase of 1.4%. However, the core version of the report, which excludes automobile sales, is predicted to have improved and show a 0.6% rise, higher than the 0.2% increase seen the in October.
Lastly, economists are expecting the December preliminary UoM consumer sentiment survey to print 68.7. Novemberâs figure stood at 67.4, which was revised up from 66.0. If the forecast holds, it would mean that consumers became more optimistic about the economy.
Would better-than-expected results from these reports cause the dollar to rally? Itâs hard to tell, especially since we are approaching the holidays. Liquidity is dying down and traders might be starting to close up shop for the year. Unwinding of dollar shorts⊠Profit taking, anyone?