At 2:00 AM Germany June HICP m/m (exp 0.1%, prev 0.2%)
Germany June HICP y/y (exp 2.0%, prev 2.0%)
Germany June CPI m/m (exp 0.1%, prev 0.2%)
Germany June CPI y/y (exp 1.8%, prev 1.9%)
At 5:00 AM Eurozone CPI m/m (exp 0.1%, prev 0.2%)
Eurozone CPI y/y (exp 1.9%, prev 1.9%)
Eurozone CPI ex-F&E m/m (exp 0.1%, prev 0.2%)
Eurozone CPI ex-F&E y/y (exp 1.9%, prev 1.9%)
At 8:30 AM US July NY Fed Manufacturing Survey (exp 18.0, prev 25.75)
Canada May Manufacturing Shipments (exp 0.5%, prev –0.6%)
The dollar continued to struggle in a holiday-thinned Asian session, remaining mired near all-time lows against the euro shy of the 1.38-mark and 26-year lows versus the sterling. Lingering uncertainties stemming from the subprime mortgage market and potential spillover to the overall economy are the catalyst for the latest sell-off in the greenback. Although the FOMC has offered little hints of a possible shift to an easing stance, traders’ anticipation for a rate cut either later this year or in early 2008 has compounded the dollar’s woes.
Tuesday
Data Barrage to Set Tone in FX
At 3:15 AM Swiss May Retail Sales (exp 4.8%, prev 3.2%)
At 4:30 AM UK June RPI m/m (exp 0.3%, prev 0.4%)
UK June RPI y/y (exp 4.2%, prev 4.3%)
UK June CPI m/m (exp 0.1%, prev 0.3%)
UK June CPI y/y (exp 2.4%, prev 2.5%)
At 5:00 AM Germany July ZEW current conditions (exp 88.0, prev 88.7)
Germany July ZEW economic sentiment (exp 19.0, prev 20.3)
At 8:30 AM US June PPI m/m (exp 0.2%, prev 0.9%)
US June PPI y/y (exp n/f, prev 4.1%)
US June core PPI m/m (exp 0.2%, prev 0.2%)
US June core PPI y/y (exp n/f, prev 1.6%)
At 9:00 AM US May Net TICS (exp $70.0 bln, prev $84.1 bln)
At 9:15 AM US June Capacity Utilization (exp 81.5%, prev 81.3%)
US June Industrial Production (exp 0.4%, prev 0.0%)
At 1:00 PM US July NAHB Housing Market Index (exp 27, prev 28)
A flurry of economic data slated for release in the Tuesday session will set the tone for the currency market and determine whether the dollar’s woes will continue. Already mired near record lows against the euro and 26-year lows versus the sterling, traders will analyze the inflation and manufacturing outlook for the US economy to gauge the likelihood for a Fed rate cut this year, which consequently, would likely prompt further declines for the greenback.
US reports set for release include June producer price index, May Net TICS, June industrial production, capacity utilization and the July NAHB housing market index. The combination of inflation, manufacturing and housing reports will provide greater insight into the health of the US economy – given fears that the slowdown in housing has continued to drag manufacturing lower while lingering inflation keeps the FOMC on hold. We anticipate headline PPI falling in July to 0.2% from 0.9%, while the core reading is unchanged at 0.2%. Industrial production for June is expected to improve to 0.4% from a flat reading in May and capacity utilization is forecasted to edge higher to 81.5% from 81.3%. The July NAHB housing market index is seen slipping to 27 from June at 28.
At 4:30 AM UK June RPI m/m (exp 0.3%, prev 0.4%)
UK June RPI y/y (exp 4.2%, prev 4.3%)
UK June CPI m/m (exp 0.1%, prev 0.3%)
UK June CPI y/y (exp 2.4%, prev 2.5%)
At 5:00 AM Germany July ZEW current conditions (exp 88.0, prev 88.7)
Germany July ZEW economic sentiment (exp 19.0, prev 20.3)
At 8:30 AM US June PPI m/m (exp 0.2%, prev 0.9%)
US June PPI y/y (exp n/f, prev 4.1%)
US June core PPI m/m (exp 0.2%, prev 0.2%)
US June core PPI y/y (exp n/f, prev 1.6%)
At 9:00 AM US May Net TICS (exp $70.0 bln, prev $84.1 bln)
At 9:15 AM US June Capacity Utilization (exp 81.5%, prev 81.3%)
US June Industrial Production (exp 0.4%, prev 0.0%)
At 1:00 PM US July NAHB Housing Market Index (exp 27, prev 28)
A flurry of economic data slated for release in the Tuesday session will set the tone for the currency market and determine whether the dollar’s woes will continue. Already mired near record lows against the euro and 26-year lows versus the sterling, traders will analyze the inflation and manufacturing outlook for the US economy to gauge the likelihood for a Fed rate cut this year, which consequently, would likely prompt further declines for the greenback.
US reports set for release include June producer price index, May Net TICS, June industrial production, capacity utilization and the July NAHB housing market index. The combination of inflation, manufacturing and housing reports will provide greater insight into the health of the US economy – given fears that the slowdown in housing has continued to drag manufacturing lower while lingering inflation keeps the FOMC on hold. We anticipate headline PPI falling in July to 0.2% from 0.9%, while the core reading is unchanged at 0.2%. Industrial production for June is expected to improve to 0.4% from a flat reading in May and capacity utilization is forecasted to edge higher to 81.5% from 81.3%. The July NAHB housing market index is seen slipping to 27 from June at 28.
Dollar Extended Loss, Awaits PPI
The dollar extended loss against its major rivals as the market has not got rid of the scare that the subprime sector meltdown may spill over into the broader economy especially after last Friday’s surprisingly weak retail sales data. The euro hovers under 1.38 versus the dollar, while the sterling strengthened to test the 2.04 level for the first time in 26 years.
Though a report showed manufacturing activity quickened in New York State, the dollar remained under pressure as inflation and housing data to be released this week are expected to be weak. The Empire Fed manufacturing index for July rose from 25.75 to 26.46, beating the estimate of 18.
A bunch of economic reports from US are due tomorrow. PPI, a key inflation gauge, is expected to fall from 0.9% to 0.2% in June. Excluding food and energy, core index is estimated to remain at 0.2% unchanged. US net TICS is seen to decrease from 84.1 billion to 70.0 billion. Capacity utilization is forecasted to barely changed from prior month’s reading of 81.3%. Besides, industrial production may increase 0.4% in June.
Though a report showed manufacturing activity quickened in New York State, the dollar remained under pressure as inflation and housing data to be released this week are expected to be weak. The Empire Fed manufacturing index for July rose from 25.75 to 26.46, beating the estimate of 18.
A bunch of economic reports from US are due tomorrow. PPI, a key inflation gauge, is expected to fall from 0.9% to 0.2% in June. Excluding food and energy, core index is estimated to remain at 0.2% unchanged. US net TICS is seen to decrease from 84.1 billion to 70.0 billion. Capacity utilization is forecasted to barely changed from prior month’s reading of 81.3%. Besides, industrial production may increase 0.4% in June.
Sterling Gained on CPI
The sterling jumped above 2.04 versus the dollar after a report showed inflation deceleration was not as fast as expected.
UK CPI headline for June fell from 2.5% to 2.4% as expected. Excluding volatile components, food and energy, the core index rose at a rate of 2% in the year to June, the fastest pace since March 1997. Another inflation gauge, RPI came out at 4.4%, up from a reading of 4.3% in the previous month. The Bank of England may need to lift rates once more in September to curb inflation.
The sterling rallied across the board following the inflation reports. It broke through the 2.04 handle against the dollar and rose to a fresh 26-year high at 2.0474.
UK CPI headline for June fell from 2.5% to 2.4% as expected. Excluding volatile components, food and energy, the core index rose at a rate of 2% in the year to June, the fastest pace since March 1997. Another inflation gauge, RPI came out at 4.4%, up from a reading of 4.3% in the previous month. The Bank of England may need to lift rates once more in September to curb inflation.
The sterling rallied across the board following the inflation reports. It broke through the 2.04 handle against the dollar and rose to a fresh 26-year high at 2.0474.
USD Slumps Ahead of CPI, Bernanke
At 1:00 AM Japan May Leading Index (exp n/f, prev 30.0)
At 4:30 AM UK May ILO Unemployment Rate (exp 5.5%, prev 5.5%)
UK May Claimant Count (exp –8.0k, prev –9.3k)
UK May Avg Earnings 3-mth (exp 3.6%, prev 4.0%)
UK July MPC Meeting Minutes (exp 6-3, prev 4-5)
At 5:00 AM Eurozone May Foreign Trade (exp 2.1 bln euros, prev 1.8 bln euros)
At 7:00 AM Canada June CPI m/m (exp 0.1%, prev 0.4%)
Canada June CPI y/y (exp 2.4%, prev 2.2%)
Canada June core CPI m/m (exp 0.1%, prev 0.3%)
Canada June core CPI y/y (exp 2.6%, prev 2.2%)
At 8:30 AM Canada June Leading Indicator (exp 0.4%, prev 0.5%)
US June CPI m/m (exp 0.1%, prev 0.7%)
US June CPI y/y (exp 2.6%, prev 2.7%)
US June core CPI m/m (exp 0.2%, prev 0.1%)
US June core CPI y/y (exp 2.2%, prev 2.2%)
US June Housing Starts (exp 1.45-mln units, prev 1.474-mln units)
US June Building Permits (exp 1.48-mln units, prev 1.52-mln units)
At 10:00 AM Fed Chairman Bernanke’s Congressional Testimony
The greenback continued to slide in early Asian trading, falling to a fresh all-time low against the euro at 1.3822 and a new 26-year low versus the sterling just shy of the 2.05-level. It’s worth noting that the trade-weighted dollar index is resting on a key support region not seen since 1992 around the 80.40-mark. A breach of this level could open up the floodgates for further losses in the currency, potentially paving the way for a move in the euro toward the 1.40-level.
Market attention will shift to Wednesday’s all-important US inflation data and Fed Chairman Ben Bernanke’s testimony before Congress. The FOMC has maintained its unchanged stance citing that the balance of risks remains skewed toward inflation despite deteriorating fundamentals in the US economy. While there is little doubt the woes in the housing market have remained on the backburner for the Fed, the extent of the downturn has been inconsistent with the jobs market remaining firm and inflationary pressure lingering – thereby keeping its hand in check. We expect the FOMC will ease rates by 25-basis points by December, on a combination of further declines in economic activity and easing of inflation.
At 4:30 AM UK May ILO Unemployment Rate (exp 5.5%, prev 5.5%)
UK May Claimant Count (exp –8.0k, prev –9.3k)
UK May Avg Earnings 3-mth (exp 3.6%, prev 4.0%)
UK July MPC Meeting Minutes (exp 6-3, prev 4-5)
At 5:00 AM Eurozone May Foreign Trade (exp 2.1 bln euros, prev 1.8 bln euros)
At 7:00 AM Canada June CPI m/m (exp 0.1%, prev 0.4%)
Canada June CPI y/y (exp 2.4%, prev 2.2%)
Canada June core CPI m/m (exp 0.1%, prev 0.3%)
Canada June core CPI y/y (exp 2.6%, prev 2.2%)
At 8:30 AM Canada June Leading Indicator (exp 0.4%, prev 0.5%)
US June CPI m/m (exp 0.1%, prev 0.7%)
US June CPI y/y (exp 2.6%, prev 2.7%)
US June core CPI m/m (exp 0.2%, prev 0.1%)
US June core CPI y/y (exp 2.2%, prev 2.2%)
US June Housing Starts (exp 1.45-mln units, prev 1.474-mln units)
US June Building Permits (exp 1.48-mln units, prev 1.52-mln units)
At 10:00 AM Fed Chairman Bernanke’s Congressional Testimony
The greenback continued to slide in early Asian trading, falling to a fresh all-time low against the euro at 1.3822 and a new 26-year low versus the sterling just shy of the 2.05-level. It’s worth noting that the trade-weighted dollar index is resting on a key support region not seen since 1992 around the 80.40-mark. A breach of this level could open up the floodgates for further losses in the currency, potentially paving the way for a move in the euro toward the 1.40-level.
Market attention will shift to Wednesday’s all-important US inflation data and Fed Chairman Ben Bernanke’s testimony before Congress. The FOMC has maintained its unchanged stance citing that the balance of risks remains skewed toward inflation despite deteriorating fundamentals in the US economy. While there is little doubt the woes in the housing market have remained on the backburner for the Fed, the extent of the downturn has been inconsistent with the jobs market remaining firm and inflationary pressure lingering – thereby keeping its hand in check. We expect the FOMC will ease rates by 25-basis points by December, on a combination of further declines in economic activity and easing of inflation.
Monday
Dollar Dipped on Bernanke Testimony
The dollar fell modestly across the board as the Fed Chairman Ben Bernanke addressed ongoing housing problem in congressional testimony. The euro rose from around 1.3775 against the dollar to above 1.38 handle, while the sterling bounced back to near 2.0550.
Bernanke said housing will remain a drag on economic growth over coming quarters. The Fed expected housing foreclosures may get worse before improving. His comments increased market worries over the collapse of subprime mortgage sector and pushed the dollar lower.
With regard to inflation, Bernanke said the Fed is still very much concerned. He said recent inflation is clearly too high but core inflation should ease as commodity prices flatten. He added it is more difficult to maintain price stability if inflation expectations rise. The Fed is more likely to keep interest rates unchanged instead of cutting rates this year.
Bernanke said housing will remain a drag on economic growth over coming quarters. The Fed expected housing foreclosures may get worse before improving. His comments increased market worries over the collapse of subprime mortgage sector and pushed the dollar lower.
With regard to inflation, Bernanke said the Fed is still very much concerned. He said recent inflation is clearly too high but core inflation should ease as commodity prices flatten. He added it is more difficult to maintain price stability if inflation expectations rise. The Fed is more likely to keep interest rates unchanged instead of cutting rates this year.
Greenback Consolidates Near Lows
At 2:00 AM June Germany PPI m/m (exp 0.2%, prev 0.3%)
June Germany PPI y/y (exp 1.8%, prev 1.9%)
At 4:30 AM UK June Retail Sales m/m (exp 0.3%, prev 0.4%)
UK June Retail Sales y/y (exp 3.5%, prev 3.9%)
At 8:30 AM Canada May Wholesale Trade m/m (exp 0.5%, prev –3.1%)
US Weekly Jobless Claims (exp 311k, prev 308k)
At 9:00 AM US June Leading Indicators (exp 0.0%, prev 0.3%)
At 12:00 PMUS July Philadelphia Fed Survey (exp 13.3, prev 18.0)
The dollar is little changed in early Thursday trading as it continues to struggle near its lows against the euro and sterling. Yesterday’s US CPI report and Congressional testimony from Fed Chairman Bernanke garnered a muted response in the currency market – as it seems clear the FOMC is at a stalemate with lingering inflationary pressure and moderating growth. As mentioned in yesterday’s preview, the trade-weighted dollar index now rests on a key multi-year support level – which could prompt some consolidation but likely prove insufficient in holding back the dollar bears.
US economic data set for release include June leading indicators and the July Philadelphia Fed survey, which are both expected to reaffirm slowing conditions in the economy. The June leading indicators are seen flat, down from 0.3% in May. Meanwhile, the July Philadelphia Fed Survey is expected to fall to 13.3 down from 18.0 from June. Also on the schedule will be Chairman Bernanke’s testimony before the Senate Banking Committee, in which he will likely reiterate yesterday’s comments.
June Germany PPI y/y (exp 1.8%, prev 1.9%)
At 4:30 AM UK June Retail Sales m/m (exp 0.3%, prev 0.4%)
UK June Retail Sales y/y (exp 3.5%, prev 3.9%)
At 8:30 AM Canada May Wholesale Trade m/m (exp 0.5%, prev –3.1%)
US Weekly Jobless Claims (exp 311k, prev 308k)
At 9:00 AM US June Leading Indicators (exp 0.0%, prev 0.3%)
At 12:00 PMUS July Philadelphia Fed Survey (exp 13.3, prev 18.0)
The dollar is little changed in early Thursday trading as it continues to struggle near its lows against the euro and sterling. Yesterday’s US CPI report and Congressional testimony from Fed Chairman Bernanke garnered a muted response in the currency market – as it seems clear the FOMC is at a stalemate with lingering inflationary pressure and moderating growth. As mentioned in yesterday’s preview, the trade-weighted dollar index now rests on a key multi-year support level – which could prompt some consolidation but likely prove insufficient in holding back the dollar bears.
US economic data set for release include June leading indicators and the July Philadelphia Fed survey, which are both expected to reaffirm slowing conditions in the economy. The June leading indicators are seen flat, down from 0.3% in May. Meanwhile, the July Philadelphia Fed Survey is expected to fall to 13.3 down from 18.0 from June. Also on the schedule will be Chairman Bernanke’s testimony before the Senate Banking Committee, in which he will likely reiterate yesterday’s comments.
Sterling Fell on Tame Retail Sales
The sterling following a weaker-than-expected UK retail sales report, dampening expectations for one more rate hike by the Bank of England within this year. The currency fell off a fresh 26-year high at 2.0546 against the dollar set yesterday to below 2.05 level. UK retail sales fell from 0.4% to 0.2% in June, falling short of a call for a 0.3% growth. The year on year retail sales growth rate was down from 3.9% to 3.4%.
The dollar remained under pressure after Fed Chairman Ben Bernanke stated the negative impact of housing issues may get worse and last longer than expected in the testimony yesterday. He today said yen weakness largely reflects Japan low interest rates. He added that he does not advocate any policy change by the Bank of Japan. Carry trades will continue to be favored as the BOJ keep its interest rates at the lowest level among all industrial countries.
Like yesterday, the dollar was little impacted by any single economic data. US weekly jobless claims fell 7k to 301k, slightly better than the estimate of 311k. US leading indicators unexpectedly rose 0.3%, versus a forecast of 0.0%. Philadelphia Fed business activity index came out at 9.2, below the estimate of 13.3.
The dollar remained under pressure after Fed Chairman Ben Bernanke stated the negative impact of housing issues may get worse and last longer than expected in the testimony yesterday. He today said yen weakness largely reflects Japan low interest rates. He added that he does not advocate any policy change by the Bank of Japan. Carry trades will continue to be favored as the BOJ keep its interest rates at the lowest level among all industrial countries.
Like yesterday, the dollar was little impacted by any single economic data. US weekly jobless claims fell 7k to 301k, slightly better than the estimate of 311k. US leading indicators unexpectedly rose 0.3%, versus a forecast of 0.0%. Philadelphia Fed business activity index came out at 9.2, below the estimate of 13.3.
Dollar Slid Across the Board
The dollar slid across the board during the US morning session in a technical move. After the sterling broke 2.0550 against the dollar, the rally accelerated to reach as high as 2.0585. The euro rose to a fresh all-time high at 1.3842 versus the dollar.
The sterling rebounded following a stronger-than-expected UK second quarter GDP report, bolstering odds that the Bank of England may raise rates once more this year. UK economy grew by 0.8% on a quarter on quarter basis, beating the estimate of 0.7% and faster than a 0.7% growth rate in the previous quarter.
As housing issues remain the major concern especially after Fed Chairman Bernanke’s testimony, the overall sentiment over the greenback is still bearish.
GBPUSD encounters interim resistance at 2.0580, backed by 2.0600 and 2.0630. Subsequent ceilings will emerge at 2.0650, followed by 2.0680 and 2.0700. On the downside, support begins at 2.0520, followed by 2.0500 and 2.0480. Additional floors are eyed at 2.0450, backed by 2.0420 and 2.0400.
The sterling rebounded following a stronger-than-expected UK second quarter GDP report, bolstering odds that the Bank of England may raise rates once more this year. UK economy grew by 0.8% on a quarter on quarter basis, beating the estimate of 0.7% and faster than a 0.7% growth rate in the previous quarter.
As housing issues remain the major concern especially after Fed Chairman Bernanke’s testimony, the overall sentiment over the greenback is still bearish.
GBPUSD encounters interim resistance at 2.0580, backed by 2.0600 and 2.0630. Subsequent ceilings will emerge at 2.0650, followed by 2.0680 and 2.0700. On the downside, support begins at 2.0520, followed by 2.0500 and 2.0480. Additional floors are eyed at 2.0450, backed by 2.0420 and 2.0400.
JPY Climbs Higher
The greenback kicks off trading mired near its lows as traders posture for several key US economic reports due out this week. Given the increased scrutiny over recent data for spillover effects from the subprime meltdown, traders will carefully analyze housing reports, Q2 GDP, PCE, and the University of Michigan consumer sentiment survey. US growth in the second quarter is seen rebounding sharply from a lackluster Q1, with the preliminary figure set to reveal robust 3.2% GDP versus a measly 0.7% from the previous quarter.
Sentiment over global interest rate differentials will continue to be a key driver in FX movements. In light of last week’s Congressional testimony from Fed Chairman Bernanke, the FOMC remains poised to leave policy unchanged with a bias against inflation. Nevertheless, with the BoE and ECB both set to maintain its tightening stance – we anticipate further losses in the dollar in the coming months as a result of yield disparities.
Sentiment over global interest rate differentials will continue to be a key driver in FX movements. In light of last week’s Congressional testimony from Fed Chairman Bernanke, the FOMC remains poised to leave policy unchanged with a bias against inflation. Nevertheless, with the BoE and ECB both set to maintain its tightening stance – we anticipate further losses in the dollar in the coming months as a result of yield disparities.
Dollar Rebounded vs Euro
The dollar rebounded against the euro slightly as a corrective move following recent sharp decline. The euro fell from 1.3850 to test 1.38 handle versus the dollar. With no economic data release, most major currencies trade in narrow ranges. Should the euro break 1.38, the dollar correction may extend to 1.37 before further euro rally to 1.39.
The sterling climbed to a fresh 26-year high at 2.0602 versus the dollar on expectations that the Bank of England will raise interest rates at least one more time in the second half of this year.
Commodity currencies gained as copper surged and oil prices hovered at high level. The Australian dollar rose to as high as 0.8842 versus the dollar, while the Canadian dollar stood firm below the 1.05 level against the dollar.
The sterling climbed to a fresh 26-year high at 2.0602 versus the dollar on expectations that the Bank of England will raise interest rates at least one more time in the second half of this year.
Commodity currencies gained as copper surged and oil prices hovered at high level. The Australian dollar rose to as high as 0.8842 versus the dollar, while the Canadian dollar stood firm below the 1.05 level against the dollar.
Dollar Struggles, Mired Near Lows
At 4:00 AM May Eurozone Current Account Balance (exp –1.2 bln euros, prev –4.0 bln euros)
July Eurozone Service PMI (exp 58.0, prev 58.3)
July Eurozone Manufacturing PMI (exp 55.5, prev 55.6)
At 5:00 AM May Eurozone Industrial Orders m/m (exp 1.1%, prev –0.4%)
May Eurozone Industrial Orders y/y (exp 7.8%, prev 12.2%)
At 8:30 AM Canada May Retail Sales m/m (exp 0.5%, prev 0.4%)
Canada May Retail Sales ex-autos m/m (exp 0.6%, prev 0.0%)
At 10:00 AM US July Richmond Fed Survey (exp 5, prev 4)
The beleaguered dollar found no reprieve in the early Tokyo session, dropping to fresh 18-year lows versus the Aussie at 0.8847 and falling to a new 26-year low against the sterling at 2.0640. We continue to monitor the trade-weighted dollar index, which trades just above the key 80-level. Traders will closely assess this week’s US economic reports to discern the trend for the greenback over the coming months – with overwhelming sentiment biased toward further declines as a result of expectations for global interest rate differentials.
The economic calendar from the US for Tuesday is light, consisting of only the July Richmond Fed manufacturing survey – seen improving to 5, up from 4 in the previous month. Traders will also continue to analyze earnings releases and monitor US equity performance. There are also Fed officials scheduled to speak, including Mishkin and Poole.
July Eurozone Service PMI (exp 58.0, prev 58.3)
July Eurozone Manufacturing PMI (exp 55.5, prev 55.6)
At 5:00 AM May Eurozone Industrial Orders m/m (exp 1.1%, prev –0.4%)
May Eurozone Industrial Orders y/y (exp 7.8%, prev 12.2%)
At 8:30 AM Canada May Retail Sales m/m (exp 0.5%, prev 0.4%)
Canada May Retail Sales ex-autos m/m (exp 0.6%, prev 0.0%)
At 10:00 AM US July Richmond Fed Survey (exp 5, prev 4)
The beleaguered dollar found no reprieve in the early Tokyo session, dropping to fresh 18-year lows versus the Aussie at 0.8847 and falling to a new 26-year low against the sterling at 2.0640. We continue to monitor the trade-weighted dollar index, which trades just above the key 80-level. Traders will closely assess this week’s US economic reports to discern the trend for the greenback over the coming months – with overwhelming sentiment biased toward further declines as a result of expectations for global interest rate differentials.
The economic calendar from the US for Tuesday is light, consisting of only the July Richmond Fed manufacturing survey – seen improving to 5, up from 4 in the previous month. Traders will also continue to analyze earnings releases and monitor US equity performance. There are also Fed officials scheduled to speak, including Mishkin and Poole.
Greenback Fell on Housing Fears
The greenback fell across the board as US housing concerns remains a big problem and it may spread into the broader economy. The euro touched the 1.3850 resistance level versus the dollar before easing back to around 1.3820. The sterling climbed to a fresh 26-year high at 2.0652 against the dollar and then retraced back to 2.0610.
The dollar index fell to a 15-year low of 80.016, near the psychological support at 80. A break of this level may trigger another round of sharp dollar sell-off.
Several manufacturing reports from the Eurozone were mixed and did little to the market. The market will focus on US June existing home sales due 10AM EST tomorrow for more clues on the nation’s housing market conditions. The report is expected to show a –1.8% decline to an annual rate of 5.87 million units, which may weigh on the dollar.
The dollar index fell to a 15-year low of 80.016, near the psychological support at 80. A break of this level may trigger another round of sharp dollar sell-off.
Several manufacturing reports from the Eurozone were mixed and did little to the market. The market will focus on US June existing home sales due 10AM EST tomorrow for more clues on the nation’s housing market conditions. The report is expected to show a –1.8% decline to an annual rate of 5.87 million units, which may weigh on the dollar.
JPY Strength Dictates FX
At 10:00 AM US June Existing Home Sales (exp –1.8%, prev –0.3%)
US June Existing Home Sales (exp 5.87 mln units, prev 5.99 mln units)
The yen strengthened across the board in early Tokyo trading, pushing through the 120-level against the dollar and climbing to 246.34 versus the sterling. Meanwhile, the greenback rode the coattails of yen strength and recovered toward the 1.38-mark versus the euro. Traders will analyze US existing home sales to further assess housing market activity, with home sales forecasted to fall by 1.8% to 5.87 million units in June.
US June Existing Home Sales (exp 5.87 mln units, prev 5.99 mln units)
The yen strengthened across the board in early Tokyo trading, pushing through the 120-level against the dollar and climbing to 246.34 versus the sterling. Meanwhile, the greenback rode the coattails of yen strength and recovered toward the 1.38-mark versus the euro. Traders will analyze US existing home sales to further assess housing market activity, with home sales forecasted to fall by 1.8% to 5.87 million units in June.
Dollar Rose Across the Board
The dollar rallied sharply across the board, recovering after recent rapid decline. After breaking the 1.38 handle, the euro accelerated its decline versus the dollar, heading towards next key level at 1.37. The sterling fell off the 26-year high set yesterday to as low as 2.0488 against the dollar.
The dollar correction is due partly to technical factors and partly to temporary passing of subprime fears. However, it should be noted that US housing issues are still existing and will nudge the market once a while in future.
US existing home sales dropped 3.8% in June to an annual rate of 5.75 million units, below the estimate of 5.87 million. The market will look into the new home sales report due tomorrow for more clues on housing market. New home sales are expected to fall from 915k units to 895k in June. Other economic data to be released on Thursday include Germany IFO survey for July, US weekly jobless claims, US durable goods orders, and Japan CPI and retail sales reports.
The dollar correction is due partly to technical factors and partly to temporary passing of subprime fears. However, it should be noted that US housing issues are still existing and will nudge the market once a while in future.
US existing home sales dropped 3.8% in June to an annual rate of 5.75 million units, below the estimate of 5.87 million. The market will look into the new home sales report due tomorrow for more clues on housing market. New home sales are expected to fall from 915k units to 895k in June. Other economic data to be released on Thursday include Germany IFO survey for July, US weekly jobless claims, US durable goods orders, and Japan CPI and retail sales reports.
USD Buoyed Ahead of Data
At 2:00 AM UK July Nationwide House Prices (exp 10.6%, prev 11.1%)
At 4:00 AM Eurozone June M3 Money Supply (exp 10.7%, prev 10.7%)
Germany July Ifo Expectations (exp 102.0, prev 102.8)
Germany July Ifo Current Conditions (exp 111.0, prev 111.4)
At 8:30 AM US June New Home Sales (exp 895k units, prev 915k units)
US Weekly Jobless Claims (exp 310.0k, prev 301.0k)
US June Durable Goods Orders (exp 1.8%, prev –2.4%)
The dollar remains firm against the majors, holding onto yesterday’s gains as traders posture for strong US economic data over the next few sessions. The trade-weighted dollar index managed to bounce off the key 80-level, finding reprieve from aggressive selling over recent weeks. The greenback’s recovery was in large part due to unwinding in the carry trades, dragging the euro and sterling lower across the board.
In the coming session, markets will digest US weekly jobless claims, June new home sales, and durable goods orders. Weekly jobless claims are seen edging up slightly to 310k, from 301k a week earlier. Although the dollar was resilient to yesterday’s disappointing existing home sales, which tumbled to its lowest level since 2002 – it reminds traders of the precarious state of the US economy. Attention will shift to today’s new home sales that are expected to decline to 895k units in June versus 915k units a month earlier. Meanwhile, boding well for the greenback are forecasts for a sharp reversal in June durable goods orders from May’s 2.4% decline, jumping by 1.8%.
At 4:00 AM Eurozone June M3 Money Supply (exp 10.7%, prev 10.7%)
Germany July Ifo Expectations (exp 102.0, prev 102.8)
Germany July Ifo Current Conditions (exp 111.0, prev 111.4)
At 8:30 AM US June New Home Sales (exp 895k units, prev 915k units)
US Weekly Jobless Claims (exp 310.0k, prev 301.0k)
US June Durable Goods Orders (exp 1.8%, prev –2.4%)
The dollar remains firm against the majors, holding onto yesterday’s gains as traders posture for strong US economic data over the next few sessions. The trade-weighted dollar index managed to bounce off the key 80-level, finding reprieve from aggressive selling over recent weeks. The greenback’s recovery was in large part due to unwinding in the carry trades, dragging the euro and sterling lower across the board.
In the coming session, markets will digest US weekly jobless claims, June new home sales, and durable goods orders. Weekly jobless claims are seen edging up slightly to 310k, from 301k a week earlier. Although the dollar was resilient to yesterday’s disappointing existing home sales, which tumbled to its lowest level since 2002 – it reminds traders of the precarious state of the US economy. Attention will shift to today’s new home sales that are expected to decline to 895k units in June versus 915k units a month earlier. Meanwhile, boding well for the greenback are forecasts for a sharp reversal in June durable goods orders from May’s 2.4% decline, jumping by 1.8%.
USD Edges Higher Ahead of GDP
At 8:30 AM US Q2 GDP y/y (exp 3.2%, prev 0.7%)
US Q2 PCE y/y (exp 3.6%, prev 3.5%)
US Q2 core PCE (exp 2.0%, prev 2.4%)
At 10:00 AM US July University of Michigan Sentiment Survey (exp 91.2, prev 85.3)
The greenback remains buoyed in early Friday trading, holding onto its previous session’s gains against the euro and sterling. The yen also continues to trade near its highs against the majors following the steep sell-off in the global equity bourses from the previous session, as heightened risk aversion remains a prime catalyst in carry trade unwinding. Lingering fears of a credit crunch and its detrimental impact on global financial markets have prompted investors to dump equities in favor of US Treasuries.
The economic calendar is poised to provide further support for the greenback, with markets looking ahead to second quarter GDP and the July University of Michigan sentiment survey. US growth in Q2 is forecasted to post a robust 3.2% gain, up sharply from a paltry first quarter reading of 0.7%. An upbeat GDP figure bodes well for the dollar and reinforces the case for the FOMC to remain unchanged over the remainder of this year, instead focusing on inflationary pressure. Accordingly, the Fed’s preferred inflation-measure, the PCE, is seen edging up in Q2 to 3.6% from a year earlier at 3.5%. The core PCE reading, however, is estimated to slip to 2.0%, down from 2.4%. Meanwhile, consumer sentiment is seen firming in July as the University of Michigan sentiment survey is forecasted to creep higher to 91.2 versus 85.3 from a month earlier. Overall, we expect the greenback to maintain its upbeat tone throughout the session, supported by data revealing improving US fundamentals.
US Q2 PCE y/y (exp 3.6%, prev 3.5%)
US Q2 core PCE (exp 2.0%, prev 2.4%)
At 10:00 AM US July University of Michigan Sentiment Survey (exp 91.2, prev 85.3)
The greenback remains buoyed in early Friday trading, holding onto its previous session’s gains against the euro and sterling. The yen also continues to trade near its highs against the majors following the steep sell-off in the global equity bourses from the previous session, as heightened risk aversion remains a prime catalyst in carry trade unwinding. Lingering fears of a credit crunch and its detrimental impact on global financial markets have prompted investors to dump equities in favor of US Treasuries.
The economic calendar is poised to provide further support for the greenback, with markets looking ahead to second quarter GDP and the July University of Michigan sentiment survey. US growth in Q2 is forecasted to post a robust 3.2% gain, up sharply from a paltry first quarter reading of 0.7%. An upbeat GDP figure bodes well for the dollar and reinforces the case for the FOMC to remain unchanged over the remainder of this year, instead focusing on inflationary pressure. Accordingly, the Fed’s preferred inflation-measure, the PCE, is seen edging up in Q2 to 3.6% from a year earlier at 3.5%. The core PCE reading, however, is estimated to slip to 2.0%, down from 2.4%. Meanwhile, consumer sentiment is seen firming in July as the University of Michigan sentiment survey is forecasted to creep higher to 91.2 versus 85.3 from a month earlier. Overall, we expect the greenback to maintain its upbeat tone throughout the session, supported by data revealing improving US fundamentals.
Dollar Steadies after Robust GDP
The dollar rallied broadly as investors cut risk exposures in global equity market and convert assets to safe haven, the US dollar.
The Dow Jones Industrial Average yesterday posted the biggest decline in five months. The S&P 500 market share shrank 30 billion yesterday. Japan and European stock markets also suffered losses in the global equity sell-off. Besides, credit spread between junk bonds and risk-free US treasury bonds widened.
The euro fell to test the long-term support at 1.3630 versus the dollar, while sterling slumped rapidly from 2.05 to as low as 2.0250.
The Dow Jones Industrial Average yesterday posted the biggest decline in five months. The S&P 500 market share shrank 30 billion yesterday. Japan and European stock markets also suffered losses in the global equity sell-off. Besides, credit spread between junk bonds and risk-free US treasury bonds widened.
The euro fell to test the long-term support at 1.3630 versus the dollar, while sterling slumped rapidly from 2.05 to as low as 2.0250.