The USD saw a fairly tight range even in the midst of a worse than expected weekly Unemployment Claims number on Thursday. The USD found a rather quick and tumultuous range that refused to explore to far away from the path against the EUR and GBP. The Unemployment Claims number produced a 637K outcome compared to the forecast of 608K. This coupled with the previous day�s negative Retail Sales figures managed to cause poor sentiment, but the U.S. equity markets acted unperturbed for the most part and actually produced a positive day. The results of the Unemployment Claims adds additional fuel to the growing argument among those saying �green shoots� can be seen and those on the other side of the aisle warning that what is being pointed to may actually turn out to be �brown weeds�.
Today the U.S. will release its Empire State Manufacturing Index and a reading of minus -12.1 is expected. This will be followed up by Consumer Sentiment numbers from the University of Michigan and a figure of 66.9 is anticipated from the preliminary finding. Other data on schedule is the TIC Long Term Purchases and Industrial Production publications. The crux of the matter for the USD is that sentiment and its contradictory perspectives are building into a convoluted disagreement about the outlook of the U.S. and global economy as the long term prospects for growth are considered. The USD has had a poor run of trading the past two weeks but has managed to gain some footing in the last couple of trading sessions. Traders will be keeping their eyes on the results from the equities markets today and if they show a decline this could entail positive action for the USD based on a desire to put assets into a safe haven.
EUR
The EUR turned in a mixed day on Thursday as investors girded themselves for the GDP reports due from Germany and France. Cautious trading took hold and a consolidated range was predominant. Germany is anticipated to turn in a minus -3.0% GDP figure today and the French are expected to produce a decline of -1.3%. Investors will watch these numbers carefully to weigh the results against the forecasts from government entities which have been said to be too optimistic by some analysts. The Italian and broad European GDP numbers will also be presented. While the EUR has been able to trade to the stronger side of its range against the USD this week and has maintained its recent highs, the results of the GDP data and continued doubts about the direction of the ECB may be enough to cause headwinds for the currency today.
GBP
There was little in the way of economic releases from the U.K. yesterday and the Sterling found itself performing on the higher side of its range against the USD. Again, there will be no major data from the U.K. going into the weekend and the GBP should be expected to trade based on a dollar centric mode. Having said this, the Sterling�s solid performance the past month continues to show stability and though there are plenty of rather less than stellar warnings about potentially lackluster growth in the U.K. - coming from the likes of the Bank of England, the GBP has maintained a steady value. All of the major currencies have shown rather conflicting movement based on market trading norms when compared to equity markets, commodities, and bond yields and because of this investors remain fragile. Going into the weekend the Sterling may find rather cautious trading.
JPY
The JPY turned in strong results on Thursday against the USD and this came in the face of better returns in the international equity markets. It appears that the JPY is the benefactor of its safe haven status in what can best be described as a nervous global marketplace. The price of Gold continues to sound alarm bells also as it trades above the 925.00 USD mark. Economic data from Japan and Asia has been rather lackluster and the recession like elsewhere is undeniable. The performance of the JPY has turned many heads the past two weeks and traders are keeping a careful eye on it.
Written by: Robert Petrucci
Bforex Chief Commodity Expert and Forex Analyst