- Dollar Advances for the First Time in Four Days as Speculative Uncertainty Crowds Out Positive Data
- Euro Traders Ignore Calendar Items, Collapses on Stimulus Rumors Ahead of ECB Decision
- Japanese Yen Rallies after BoJ Takes Additional Steps to Stimulus Economy
- British Pound Active Despite Market Holiday as Data and Growth Forecasts Keep Currency Active
- Canadian Dollar Receives Discouraging Benchmark for Tomorrow’s 2Q GDP Reading
- Australian Dollar Wades Through Fundamental Event Risk as Big Ticket Indicators Precede GDP Release
Dollar Advances for the First Time in Four Days as Speculative Uncertainty Crowds Out Positive Data
Following a run of three consecutive daily declines against its benchmark euro counterpart through Friday, the US dollar snapped is losing streak with a steady and encouraging rally. Gauging the quality of the currency’s performance, it is worth noting that it was the biggest positive move for the greenback since the 20th and the buying pressure was surprisingly consistent throughout the day. That being said, when put into context with the previous two weeks; today’s progress doesn’t yet signal the development of a new and prolific trend. In fact, a clear bearing has eluded the markets for most of the month. We can qualify this suggestion by highlighting the lack of direction for the greenback against its counterparts, the equity benchmarks’ distance from relative highs and lows for the year, and the stabilization of underlying capital investment indicators (for example, money market funds have leveled off for the past four months). Much like the situation whereby volatility can be dampened over an entire week under the threat of big ticket event risk on a Friday; we see market participants are deferring their long-term positions under the auspices that bigger financial or economic troubles are brewing on the horizon.
It was this uncertainty and doubt that prevailed over the promise of a few positive economic indicators on the US docket Monday. Both the monthly personal income and spending indicators offer a timely update on the most influential constituent of the world’s largest economy – the US consumer. Benchmarking the data’s performance against economists’ forecasts; spending actually bested expectations while wages fell short of their consensus. Overall, however, the data was generally an encouraging update for the pace of economic activity. The 0.4 percent increase in consumption and 0.2 percent improvement in income for July follows a month of no change for both. Without context, this would be an encouraging development for an economy that has received a downgrade from the Federal Reserve and speculators at large. Yet, when we take into consideration the employment situation, collapsing housing recovery and other critical timely factors; it is hard to reconcile this new data as anything but a temporary deviation from a disappointing norm. This is the skepticism that we must be cognizant of when we head into Tuesday’s scheduled event risk. The Conference Board’s consumer confidence survey for August is expected to show a modest improvement in its headline reading; and the multi-faceted details of this report will be enticing. That being said, this reading can either conform to the dominant sense of doubt or temporarily prop up investor sentiment.
If we had to nominate the top event risk for the coming 24 hours, the Fed’s meeting minutes would likely top the list. Since the policy authority announced its intensions to buy government debt and Chairman Bernanke expressed his doubts over the future of the economy last week, speculation of a double dip recession and/or quantitative easing has festered. And, on the topic of uncertainty, we note that the BoJ voiced concern over the especially doubtful outlook for the US; and China is rumored to have suffered $430 billion losses on its Treasuries position.
Related: Discuss the Dollar in the DailyFX Forum, John’s Analyst Picks: Short-term Trades Join the Stalwart EURUSD and USDJPY Positions
Euro Traders Ignore Calendar Items, Collapses on Stimulus Rumors Ahead of ECB Decision
The euro was another currency that would not match up well to its typically easy-to-interpret scheduled event risk. The shared currency dropped against most of its liquid counterparts Monday despite a balance of positive data. On tap for the day was the 29-month high in European Commission’s economic confidence survey and 32-month high from its consumer sentiment reading. There this would normally encourage speculation that Europe will outpace its peers and the ECB will be encouraged to rate hikes; we have seen the reality of a significant fundamental and speculative headwind set in. More important to traders at this point was the Financial Times’ article that quoted unnamed sources with suggesting the ECB would likely extend its emergency stimulus program into 2011. Speculation that European officials are going to follow the same stimulus path as the US and Japan speaks to the market’s concern for the region and state of global finances.
Japanese Yen Rallies after BoJ Takes Additional Steps to Stimulus Economy
One of the most remarkable fundamental developments over the opening 24 hours of the trading week was the Bank of Japan’s decision to expand its financial stimulus plan. While the increase in the lending facility from 20 to 30 trillion yen was no surprise; it nonetheless furthers reflects policy officials’ inability to support growth, stamp out deflation and stabilize local financial markets. To make sure this wasn’t interpreted as a positive turn of events for speculators, BoJ Governor Shirakawa remarked that the future is uncertainty and exchange rates “unstable.”
British Pound Active Despite Market Holiday as Data and Growth Forecasts Keep Currency Active
The London markets were offline for the Summer holiday; but the sterling was nonetheless on the move at the start of the week. The economic docket would bring the biggest drop in the Hometrack’s Housing survey in 16 months and a sharp uptick in the GfK consumer confidence survey. That being said, the BCC’s forecasts took top spot. The group projected a hold on BoE rate until 2011 and five-year average growth of 2 percent.
Canadian Dollar Receives Discouraging Benchmark for Tomorrow’s 2Q GDP Reading
The Canadian dollar has seen volatility increase substantially over the past few active trading sessions. This leverages the potential reaction to tomorrow’s 2Q GDP reading. The reading is expected to slow from a 6.1 to 2.5 percent pace; which would put the nation in the same boat as neighbor to the south: the US. And, given the increase in the current account deficit over the same period; these forecasts seem reasonable.
Australian Dollar Wades Through Fundamental Event Risk as Big Ticket Indicators Precede GDP Release
The Australian dollar has waded through a significant round of event risk in just the opening 36 hours of trade. Home sales dropped 7 percent, building approvals rose 2.3 percent, retail sales grew 0.7 percent and private sector credit edged up 0.1 percent. What fundamental traders are really interested in though is the 9 year high in 2Q corporate profits and 0.5 percent drop in inventories to proceed tomorrows GDP reading.
For Real Time Forex News, visit: http://www.dailyfx.com/real_time_news/
**For a full list of upcoming event risk and past releases, go to www.dailyfx.com/calendar
ECONOMIC DATA
Next 24 Hours
|
Currency |
GMT |
Release |
Survey |
Previous |
Comments |
|
NZD |
22:45 |
Building Permits (MoM) (JUL) |
2.0% |
3.5% |
Increased in the last two months. |
|
GBP |
23:01 |
GfK Consumer Confidence Survey (AUG) |
-24 |
-22 |
Sits at lowest level in 11 months. |
|
JPY |
23:50 |
Industrial Production (MoM) (JUL P) |
-0.2% |
-1.1% |
Declined in June by the most since Feb. 2009. |
|
JPY |
23:50 |
Industrial Production (YoY) (JUL P) |
14.3% |
17.3% |
|
|
JPY |
23:50 |
Retail Trade s.a. (MoM) (JUL) |
0.5% |
0.4% |
Increased in June for a fifth time in six months. |
|
JPY |
23:50 |
Retail Trade (YoY) (JUL) |
3.5% |
3.3% |
|
|
JPY |
23:50 |
Large Retailers’ Sales (JUL) |
-1.3% |
-3.1% |
Sales declined annually in June for a 27th consecutive month. |
|
JPY |
1:30 |
Labor Cash Earnings (YoY) (JUL) |
1.8% |
||
|
AUD |
1:30 |
Retail Sales s.a. (MoM) (JUL) |
0.4% |
0.2% |
Rose in last four months. |
|
AUD |
1:30 |
Private Sector Credit (MoM) (JUL) |
0.3% |
0.2% |
Bank lending increased in June for an eighth consecutive month. |
|
AUD |
1:30 |
Private Sector Credit (YoY) (JUL) |
3.0% |
2.8% |
|
|
AUD |
1:30 |
Building Approvals (MoM) (JUL) |
-0.7% |
-3.3% |
Declined in all but one of the first six months of 2010. |
|
AUD |
1:30 |
Building Approvals (YoY) (JUL) |
6.1% |
13.2% |
|
|
AUD |
1:30 |
Current Account Balance (Australian Dollar) (2Q) |
-6500M |
-16551M |
C.A. deficit likely narrowed in 2Q. |
|
AUD |
1:30 |
Australia Net Exports of GDP (2Q) |
0.3% |
-0.5% |
Negative read in last 3 quarters. |
|
JPY |
5:00 |
Housing Starts (YoY) (JUL) |
2.0% |
0.6% |
Japanese housing starts increased in June for just the second time this year. |
|
JPY |
5:00 |
Annualized Housing Starts (JUL) |
0.756M |
0.750M |
|
|
JPY |
5:00 |
Construction Orders (YoY) (JUL) |
-10.2% |
||
|
JPY |
5:00 |
Small Business Confidence (AUG) |
48.1 |
At highest level since Sept. 2007. |
|
|
CHF |
6:00 |
UBS Consumption Indicator (JUL) |
1.81 |
At highest level since July ’08. |
|
|
EUR |
7:55 |
German Unemployment Change (AUG) |
-20K |
-20K |
Fell for 13th month in July as exports boomed. |
|
EUR |
7:55 |
German Unemployment Rate s.a. (AUG) |
7.6% |
7.6% |
|
|
GBP |
8:30 |
Mortgage Approvals (JUL) |
46.5K |
47.6K |
Fell for second month in June. |
|
GBP |
8:30 |
Net Consumer Credit (JUL) |
0.0B |
-0.1B |
Contracted in June for the second time in 3 months. |
|
GBP |
8:30 |
Net Lending Sec. on Dwellings (JUL) |
0.7B |
0.7B |
|
|
GBP |
8:30 |
M4 Money Supply (MoM) (JUL F) |
0.4% |
U.K. M4 money supply increased in July by the most since October 2009. |
|
|
GBP |
8:30 |
M4 Money Supply (YoY) (JUL F) |
2.3% |
||
|
GBP |
8:30 |
M4 Money Supply Ex OFCs (3MoY) (JUL) |
6.0% |
||
|
EUR |
9:00 |
Euro-Zone CPI Estimate (YoY) (AUG) |
1.6% |
1.7% |
Nearing ECB’s target. |
|
EUR |
9:00 |
Euro-Zone Unemployment Rate (JUL) |
10.0% |
10.0% |
10% is 20-month high. |
|
12:30 |
Gross Domestic Product (MoM) (JUN) |
0.2% |
0.1% |
Canada’s GDP expanded in May on gains in mining and energy. |
|
|
CAD |
12:30 |
Quarterly Gross Domestic Product Annualized (2Q) |
2.5% |
6.1% |
|
|
USD |
13:00 |
S&P/Case-Shiller Composite-20 s.a. (MoM) (JUN) |
0.35% |
0.47% |
Gains in home prices probably cooled in June, according to the S&P/Case-Shiller report, while pending home sales likely fell in July for a third consecutive month. |
|
USD |
13:00 |
S&P/Case-Shiller Composite-20 (YoY) (JUN) |
3.50% |
4.61% |
|
|
USD |
13:00 |
S&P/Case-Shiller Home Price Index (JUN) |
146.43 |
||
|
USD |
13:00 |
S&P/Case-Shiller US Home Price Index (2Q) |
131.8 |
||
|
USD |
13:00 |
S&P/Case-Shiller US Home Price Index (YoY) (2Q) |
2.0% |
||
|
USD |
13:45 |
Chicago Purchasing Manager (AUG) |
57 |
62.3 |
Likely fell to 9-month low. |
|
USD |
14:00 |
Consumer Confidence (AUG) |
51.0 |
50.4 |
Sits at lowest reading since Feb. |
|
USD |
14:00 |
NAPM-Milwaukee (AUG) |
60.3 |
66 |
At highest level this year. |
|
USD |
21:00 |
ABC Consumer Confidence (AUG 29) |
-44 |
Confidence rose in last 3 weeks. |
|
Currency |
GMT |
Upcoming Events & Speeches |
|
USD |
18:00 |
Federal Open Market Committee Meeting Minutes |
SUPPORT AND RESISTANCE LEVELS
CLASSIC SUPPORT AND RESISTANCE – 18:00 GMT
|
Currency |
EUR/USD |
GBP/USD |
USD/JPY |
USD/CHF |
USD/CAD |
AUD/USD |
NZD/USD |
EUR/JPY |
GBP/JPY |
EUR/GBP |
|
Resistance 2 |
1.3815 |
1.6375 |
95.05 |
1.0600 |
1.0922 |
0.9850 |
0.7635 |
127.60 |
146.05 |
0.8725 |
|
Resistance 1 |
1.3500 |
1.5965 |
89.00 |
1.0460 |
1.0750 |
0.9335 |
0.7440 |
120.00 |
140.00 |
0.8600 |
|
Spot |
1.2661 |
1.5460 |
84.63 |
1.0262 |
1.0594 |
0.8929 |
0.7084 |
107.16 |
130.84 |
0.8190 |
|
Support 1 |
1.2500 |
1.5125 |
83.00 |
1.0130 |
0.9950 |
0.8100 |
0.6850 |
103.80 |
125.00 |
0.8065 |
|
Support 2 |
1.2150 |
1.5000 |
80.00 |
0.9960 |
0.9700 |
0.7835 |
0.6585 |
100.00 |
119.00 |
0.7780 |
CLASSIC SUPPORT AND RESISTANCE –EMERGING MARKETS 18:00 GMTSCANDIES CURRENCIES 18:00 GMT
|
Currency |
USD/MXN |
USD/TRY |
USD/ZAR |
USD/HKD |
USD/SGD |
Currency |
USD/SEK |
USD/DKK |
USD/NOK |
|
Resistance 2 |
14.4500 |
1.8025 |
8.7915 |
7.8165 |
1.4945 |
Resistance 2 |
7.7500 |
5.7800 |
6.2750 |
|
Resistance 1 |
13.8500 |
1.6755 |
8.3675 |
7.8075 |
1.4655 |
Resistance 1 |
7.5800 |
5.5400 |
6.1150 |
|
Spot |
13.1491 |
1.5258 |
7.3480 |
7.7792 |
1.3556 |
Spot |
7.4142 |
5.8807 |
6.3150 |
|
Support 1 |
12.0500 |
1.4500 |
7.1615 |
7.7490 |
1.3440 |
Support 1 |
1.1650 |
5.3000 |
5.8000 |
|
Support 2 |
11.7200 |
1.3665 |
6.6950 |
7.7450 |
1.3000 |
Support 2 |
7.0000 |
5.1000 |
5.6000 |
INTRA-DAY PIVOT POINTS 18:00 GMT
|
Currency |
EUR/USD |
GBP/USD |
USD/JPY |
USD/CHF |
USD/CAD |
AUD/USD |
NZD/USD |
EUR/JPY |
GBP/JPY |
EUR/GBP |
|
Resistance 2 |
1.2812 |
1.5617 |
86.38 |
1.0341 |
1.0679 |
0.9068 |
0.7173 |
110.38 |
134.57 |
0.8256 |
|
Resistance 1 |
1.2736 |
1.5538 |
85.51 |
1.0302 |
1.0636 |
0.8999 |
0.7129 |
108.77 |
132.70 |
0.8223 |
|
Pivot |
1.2698 |
1.5498 |
85.03 |
1.0269 |
1.0555 |
0.8962 |
0.7104 |
107.95 |
131.76 |
0.8193 |
|
Support 1 |
1.2622 |
1.5419 |
84.16 |
1.0230 |
1.0512 |
0.8893 |
0.7060 |
106.34 |
129.89 |
0.8160 |
|
Support 2 |
1.2584 |
1.5379 |
83.68 |
1.0197 |
1.0431 |
0.8856 |
0.7035 |
105.52 |
128.95 |
0.8129 |
INTRA-DAY PROBABILITY BANDS 18:00 GMT
|
Currency |
EUR/USD |
GBP/USD |
USD/JPY |
USD/CHF |
USD/CAD |
AUD/USD |
NZD/USD |
EUR/JPY |
GBP/JPY |
EUR/GBP |
|
Resistance 3 |
1.2826 |
1.5648 |
85.71 |
1.0391 |
1.0729 |
0.9061 |
0.7193 |
108.93 |
133.03 |
0.8273 |
|
Resistance 2 |
1.2785 |
1.5601 |
85.44 |
1.0359 |
1.0695 |
0.9028 |
0.7166 |
108.49 |
132.49 |
0.8253 |
|
Resistance 1 |
1.2744 |
1.5554 |
85.17 |
1.0327 |
1.0661 |
0.8995 |
0.7138 |
108.04 |
131.94 |
0.8232 |
|
Spot |
1.2661 |
1.5460 |
84.63 |
1.0262 |
1.0594 |
0.8929 |
0.7084 |
107.16 |
130.84 |
0.8190 |
|
Support 1 |
1.2578 |
1.5366 |
84.09 |
1.0197 |
1.0527 |
0.8863 |
0.7030 |
106.28 |
129.74 |
0.8148 |
|
Support 2 |
1.2537 |
1.5319 |
83.82 |
1.0165 |
1.0493 |
0.8830 |
0.7002 |
105.83 |
129.19 |
0.8127 |
|
Support 3 |
1.2496 |
1.5272 |
83.55 |
1.0133 |
1.0459 |
0.8797 |
0.6975 |
105.39 |
128.65 |
0.8106 |
v
Written by: John Kicklighter, Currency Strategist for DailyFX.com
To receive John’s reports via email or to submit Questions or Comments about an article; email jkicklighter@dailyfx.com
