The US dollar and Japanese yen fell against the commodity dollars on Monday as risk appetite drove carry trades higher through the start of the US trading session. However, the greenback gained versus the euro, yen, Swiss franc, and British pound, but for what it’s worth, the majors remain within the same trading ranges that have contained price for weeks, if not months. Meanwhile, the S&P 500 has shown some signs of topping, as the index was not able to push above resistance at 1035 and ultimately ended the day down 0.56 points at 1025.57. Looking to US economic news, the Chicago Fed’s National Activity Index rose to -0.74 in July from -1.82, as production-related indicators made a positive contribution to the index for the first time since October 2008. This is in line with most other manufacturing reports, adding to the number of indicators showing that the only signs of recovery we’re seeing in the US are related to cars or exports.
On Tuesday, the August reading of the Conference Board’s measure of US consumer confidence is expected to rise slightly to 47.8 from 46.6 in July, but overall, there are some downside risks for this report. Indeed, preliminary readings of the University of Michigan’s consumer confidence index show that sentiment soured in August, with the index hitting a 5-month low of 63.2 from 66.0, as the “economic conditions” component dove down to 64.9 from 70.5, while the “economic outlook” slipped to 62.1 from 63.2. Furthermore, the latest consumption results were disappointing, as advance retail sales, excluding autos, fell 0.6 percent in July. Disappointing numbers could have especially negative repercussions for risk appetite, especially as Friday’s rally in equities and carry trades was due to speculation that the US economy is making its way out of recession.