The USD started the day off picking up ground against the major currencies but as international equity markets made a move upwards the greenback began to lose momentum and declined. There was no major economic news from the U.S. on Monday but that begins to change today as the U.S. will initiate a powerful wave of data over the next few days leading into the long holiday weekend that begins on Friday. Stepping up to the plate today is the S&P/CS Composite-20 HPI and it is expected to produce a reading of minus -18.7%, which would be unchanged from the previous report. Also the Chicago PMI release is on schedule and it carries a projection of 38.9, which would be better than the last number of 34.9. Traders today will watch these results carefully to see if the U.S. economy is showing any positive signs from the critical housing and manufacturing sectors.
Tomorrow the ADP Non Farm Employment Change, Pending Home Sales, and the ISM Non Manufacturing reports are all lined up. The critical statistics will culminate on Thursday from the U.S. when the government releases its official and all important Non Farm Employment Change figures. The data could begin to reach a flood like level with the publication of the jobless figures on Thursday but the question is how many traders will be around to participate in the marketplace. Because of the ensuing holiday in the U.S., which typically sees investors leave their offices in droves, the market may find itself vulnerable because of light volume in the stock market. With evidence being strong as of late that the USD�s value has been trading in direct correlation with the gyrations from Wall Street, traders who do stay around for trading on Thursday before the holiday weekend officially gets underway may be greeted by a sea of volatility. The jobless numbers as of now are being called to produce no change from the previous report, however there are many people who feel the number will be worse than expected. The USD is in a precarious place. It traded to the weaker side of its ranges against the majors yesterday in what most likely was a move directly related to increased risk appetite that appeared in the bourses. Equity markets will be the key barometer for the USD�s value again today.
As the day came to an end the EUR found itself trading in a strong range against the USD. There was little in the way of economic data from the European Union yesterday except for the broad Consumer Confidence report which produced a result of minus -25, slightly better than the estimate of minus -29. Today Europe will see the release of the German Unemployment Change statistics and a number of 44K is forecasted. Also the M3 Money Supply data will be published from the European Central Bank. Tomorrow the German Retail Sales figures are due. The EUR has had two strong days of trading against the USD after showing signs of wavering before going into the weekend. The EUR will continue to trade under the sentiment generated from the economic news from its own continent but will also find that it certainly moves in a dollar centric mode.
The Sterling turned in another good day of trading against the USD on Monday even as Mortgage Approval data turned in a negative number. The Bank of England published the mortgage numbers along with the Net Lending to Individuals statistics yesterday and neither report was inspiring. Mortgage Approvals showed a figure of 43K compared to the projection 46K. The Net Lending to Individuals numbers brought forth were 0.6 billion compared to the estimate of 1.3 billion. Today the Nationwide HPI is on schedule and is forecasted to have a result of minus -0.4%. Also in line are the Final GDP figures which are anticipated to have a minus -2.0% number. Tomorrow the Halifax HPI is on cue along with the Manufacturing PMI data. The Sterling has continued to show strength against the USD after giving hints that its run may be losing steam. The releases from the U.K. will be important over the next couple of days and coupled with the risk events that will be taking place in the U.S. it stands to reason that trading could be opportunistic within the GBP throughout the week.
The JPY climbed towards the stronger side of its range against the USD on Monday as the gains in global equity markets created a weaker foundation for the greenback. Gold climbed back into the 942.00 USD range as the day neared its end. The JPY continues to be embroiled within a very strong consolidated pattern against the USD as investors show that risk appetite is tied fiercely to the results in the international bourses.
Written by: Robert Petrucci
Bforex Chief Commodity Expert and Forex Analyst