- Dollar and S&P 500 will See Significant Repercussion in FOMC Minutes
- Euro Slides as Data, Financial Conditions Continue to Deteriorate
- Canadian Dollar Offers Limited Reaction to 2Q Trade, But What about 2Q GDP?
- British Pound Moving Closer and Closer to Stimulus Expansion
- Swiss Franc Shows No Gain with Euro’s Pullback Tuesday
- Will Japan’s New Prime Minister Finally Improve Market, Fiscal Conditions?
- Gold Maintains its Volatility with Another Sharp Rally as EU, US Troubles Grow
Dollar and S&P 500 will See Significant Repercussion in FOMC Minutes
Scheduled event risk painted a remarkable picture for traders Tuesday – even if price action would suggest otherwise. Both the Conference Board Consumer Confidence survey for August and the meeting minutes from the Fed’s August 9th policy gathering offered remarkable surprises that will no doubt carry significant consequence for the capital markets and dollar over the coming weeks and months. That said, neither equities nor the greenback showed more than a brief jump in volatility after the respective releases. Does this mean these fundamentals have already been priced in? Partly. But, more importantly, this limited reaction falls under the scope of current market conditions. Major breakouts and trend generation simply cannot find traction in the current trading environment until one of the primary themes shakes the foundations of financial stability and liquidity. And, neither of these developments could rise to the challenge.
Of the two headlines out of the US this past session, the more remarkable update came from the Fed’s minutes. We had assumed ahead of time that the statement would be a non-event since Chairman Ben Bernanke had set us on course to the September 21st policy decision with his speech at the Jackson Hole conference this past Friday. His suggestion that the central bank still has a “range of tools”, and that the next meeting would be extended a day to discuss these options, raised the threat of further stimulus a few notches. That lean no doubt restrained the highlights from the minutes. Nevertheless, the notes in this report were far more explicit. Aside from the suggestion that some policy officials deemed “more substantial” assistance necessary (Chicago Fed President Evans admitted to this during the day) and commodity inflation was transitory; the report stated that the group was already discussing alternative policy venues. Setting explicit guidance on economic figures and change the rate on excess reserves are write offs; but the possibility of further asset purchases and changing the maturity of balance sheet holdings are real options. If there is a chance of further stimulus next month, it will likely see a chance in the balance sheet holdings, not size.
The other remarkable release for the day, the sentiment survey, was an unmistakable “surprise”. The reading reported well below expectations after with the lowest reading since April of 2009 after the biggest monthly drop since October 2008 (we all know what happened back then). Sentiment is a necessity to spending and consumer spending is essential for last growth. That said, this data confirms what we already knew that the economy is grinding to a halt and that financial issues are turning into economic troubles. Nonetheless, data like this tears away at complacency. Both this gauge and the minutes will likely leverage the market impact of the upcoming ADP and Friday’s NFPs release.
Related:Discuss the Dollar in the DailyFX Forum, John’s Videos: Why Fed Minutes Curb Market Conditions More than the US Dollar
Euro Slides as Data, Financial Conditions Continue to Deteriorate
The euro slid against its US and Japanese counterparts Tuesday though risk appetite trends were otherwise stable. This suggests the currency was reflecting its own fundamental shortfalls rather than the oscillation in sentiment for the broader market. From the docket, we learned that Euro Zone economic confidence posted its biggest drop since December of 2008 (seems the Euro is on the same level as the US now). Just as notable was Italy’s bond auction (its first since the ECB starting buying government debt). The yields dropped but not to levels synonymous with stability. And, another headline, the IASB is reportedly “greatly concerned” about the small write downs on Euro-banks Greek exposure.
Canadian Dollar Offers Limited Reaction to 2Q Trade, But What about 2Q GDP?
The Canadian dollar had notable data to work with these past 24 hours; but it didn’t fall into the critical veins of the market’s interest. The 2Q current account deficit ballooned more than expected to a C$15.3 billion shortfall (the second largest on record); but that wasn’t seen as materially undermining the currency’s greenback-alternative appeal. The upcoming 2Q GDP reading won’t be as isolated.
British Pound Moving Closer and Closer to Stimulus Expansion
Event risk from the UK this past session has furthered the argument for further BoE bond purchases in the not-too-distant future. Ignoring the mortgage approvals for July, we noted that the National Housing Federation forecasted the lowest level of home ownership since the 1980’s going forward. Easier to grasp was the GfK’s consumer sentiment survey for August which dropped to its lowest reading since February 2009.
Swiss Franc Shows No Gain with Euro’s Pullback Tuesday
We noted a drop in the euro against its US and Japanese counterparts (supposed safe havens); so why didn’t the franc leverage a rally of its own this past session? After marked corrections, previously consistent trends carry less sway. With the franc, the sharp slide and imposing threat of a peg (supposedly around current levels) curbs any bid efforts that are less than certain.
Will Japan’s New Prime Minister Finally Improve Market, Fiscal Conditions?
Japan welcomes its sixth Prime Minister in five years; and he has a lot of work ahead of him. Typically we expect changes in regime to provide momentum to make necessary changes (like guiding Japan out of its long-term financial stagnation or helm the economic recovery); but Noda is not going to have an easy time with this. The outlook is unmoved for the Japan — and therefore its long-term bearish lean remains.
Gold Maintains its Volatility with Another Sharp Rally as EU, US Troubles Grow
Volatility has backed off across the financial markets as we are now in a holding pattern for the possibility of further US stimulus next month. However, gold seems to have broken from that trend. The precious metal posted a remarkable rally Tuesday to fully offset its previous session losses. Why is this commodity still moving aggressively? Because it is one of the few assets that marks a good alternative to currencies.
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
|
GMT |
Currency |
Release |
Survey |
Previous |
Comments |
|
0:30 |
AUD |
RPData-Rismark House Px Raw (JUL) |
-0.6% |
Higher house prices buoyed by demand may lead to an expansion of the construction sector |
|
|
0:30 |
AUD |
RPData-Rismark House Px s.a. (JUL) |
-0.2% |
||
|
1:00 |
NZD |
NBNZ Activity Outlook (AUG) |
43.7 |
Activity surveys weakening as global recovery slows, rate hike on the horizon |
|
|
1:00 |
NZD |
NBNZ Business Confidence (AUG) |
47.6 |
||
|
1:30 |
JPY |
Labor Cash Earnings (YoY) (JUL) |
-0.5% |
-0.7% |
BoJ unlikely to raise rates on slower fall |
|
1:30 |
AUD |
Private Sector Credit (MoM) (JUL) |
0.2% |
-0.1% |
Credit expected to stay the same on less borrowing, restricted credit |
|
1:30 |
AUD |
Private Sector Credit (YoY) (JUL) |
2.7% |
2.7% |
|
|
3:00 |
NZD |
Money Supply M3 (YoY) (JUL) |
7.3% |
Could fall as demand slows for NZ goods |
|
|
4:00 |
JPY |
Vehicle Production (YoY) (JUL) |
-13.9% |
Strong yen seen as hurting exports |
|
|
5:00 |
JPY |
Construction Orders (YoY) (JUL) |
6.0% |
Construction demand seen to still increase as rebuilding efforts continue, though slowing due to capital drying up |
|
|
5:00 |
JPY |
Annualized Housing Starts (JUL) |
0.829M |
0.817M |
|
|
5:00 |
JPY |
Housing Starts (YoY) (JUL) |
4.9% |
5.8% |
|
|
6:00 |
EUR |
German Retail Sales MoM (JUL) |
-1.5% |
4.5% |
Falling retail sales could hinder rates hikes in the near future |
|
6:00 |
EUR |
German Retail Sales YoY (JUL) |
-0.8% |
-1.0% |
|
|
7:55 |
EUR |
German Unemployment Change (AUG) |
-10K |
-11K |
German labor markets expected to weaken at a slower pace, though still pointing to troubles |
|
7:55 |
EUR |
German Unemployment Rate s.a. (AUG) |
7.0% |
7.0% |
|
|
8:00 |
EUR |
Italian Unemployment Rate s.a. (JUL P) |
8.0% |
8.0% |
Italian unemployment in plateau |
|
9:00 |
EUR |
Euro-Zone CPI Estimate (YoY) (AUG) |
2.5% |
2.5% |
Eurozone 17 data not expected to change ECB rate decisions soon |
|
9:00 |
EUR |
Euro-Zone Unemployment Rate (JUL) |
9.9% |
9.9% |
|
|
9:00 |
EUR |
Italian CPI (NIC incl. tobacco) (MoM) (AUG P) |
0.2% |
0.3% |
Italian prices expected mostly stable, unlikely to have large effect on ECB rate decisions or views on economy |
|
9:00 |
EUR |
Italian CPI (NIC incl. tobacco) (YoY) (AUG P) |
2.7% |
2.7% |
|
|
9:00 |
EUR |
Italian CPI – EU Harmonized (MoM) (AUG P) |
0.2% |
-1.7% |
|
|
9:00 |
EUR |
Italian CPI – EU Harmonized (YoY) (AUG P) |
2.1% |
2.1% |
|
|
10:00 |
EUR |
Italian Producer Price Index (MoM) (JUL) |
0.4% |
0.1% |
|
|
10:00 |
EUR |
Italian Producer Price Index (YoY) (JUL) |
4.8% |
4.7% |
|
|
11:00 |
USD |
MBA Mortgage Applications (AUG 26) |
-2.4% |
New apps may be higher on rates promise |
|
|
11:30 |
USD |
Challenger Job Cuts (YoY) (AUG) |
59.0% |
Preliminary surveys ahead of Friday’s NFPs expected to weaker, though bearing will be on actual reported tat |
|
|
12:15 |
USD |
ADP Employment Change (AUG) |
103K |
114K |
|
|
12:30 |
Gross Domestic Product (YoY) (JUN) |
2.2% |
Canadian output could slow as weaker US demand cutting into Canadian productivity |
||
|
12:30 |
CAD |
Quarterly Gross Domestic Product Annualized (Q2) |
0.0% |
3.9% |
|
|
12:30 |
CAD |
Gross Domestic Product (MoM) (JUN) |
0.1% |
-0.3% |
|
|
13:00 |
CAD |
Teranet/National Bank HPI (MoM) (JUN) |
1.3% |
House price index seeing declines as demand dropping |
|
|
13:00 |
CAD |
Teranet/National Bank HP Index (JUN) |
142.27 |
||
|
13:00 |
CAD |
Teranet/National Bank HPI (YoY) (JUN) |
4.4% |
||
|
13:45 |
USD |
Chicago Purchasing Manager (AUG) |
53.5 |
58.8 |
US manufacturing data showing overall cautiousness on lower dmenad |
|
14:00 |
USD |
Factory Orders (JUL) |
1.8% |
-0.8% |
|
|
14:00 |
USD |
NAPM-Milwaukee (AUG) |
52.9 |
57.6 |
|
|
14:30 |
USD |
DOE U.S. Crude Oil Inventories (AUG 26) |
-2213K |
Negative inventories for crude indicates an upswing in larger industrial demand |
|
|
14:30 |
USD |
DOE Cushing OK Crude Inventory (AUG 26) |
-26K |
||
|
14:30 |
USD |
DOE U.S. Distillate Inventory (AUG 26) |
1731K |
||
|
14:30 |
USD |
DOE U.S. Gasoline Inventories (AUG 26) |
1355K |
||
|
22:45 |
NZD |
Terms of Trade Index (QoQ) (Q2) |
0.9% |
NZ trade expected to grow slower |
|
|
23:30 |
AUD |
AiG Performance of Manufacturing Index (AUG) |
43.4 |
Survey in shrinking territory |
|
GMT |
Currency |
Upcoming Events & Speeches |
|
16:30 |
USD |
Fed’s Lockhart Speaks on Economy in Lafayette |
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 |
|
Resist 2 |
1.5160 |
1.6745 |
86.00 |
0.8560 |
1.0275 |
1.0750 |
0.9020 |
118.00 |
146.05 |
|
Resist 1 |
1.5000 |
1.6600 |
81.50 |
0.8275 |
1.0000 |
1.0800 |
0.8750 |
113.50 |
140.00 |
|
Spot |
1.4450 |
1.6308 |
76.67 |
0.8193 |
0.9778 |
1.0709 |
0.8548 |
110.79 |
125.03 |
|
Support 1 |
1.4000 |
1.5935 |
76.35 |
0.7500 |
0.9425 |
1.0350 |
0.7745 |
109.00 |
124.00 |
|
Support 2 |
1.3700 |
1.5750 |
75.50 |
0.7000 |
0.9055 |
0.9925 |
0.6850 |
106.00 |
119.00 |
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 |
|
Resist 2 |
13.8500 |
1.8235 |
7.4025 |
7.8165 |
1.3650 |
Resist 2 |
7.5800 |
5.6625 |
6.1150 |
|
Resist 1 |
12.5000 |
1.8000 |
7.3500 |
7.8075 |
1.3250 |
Resist 1 |
6.5175 |
5.3100 |
5.7075 |
|
Spot |
12.5040 |
1.7322 |
7.0759 |
7.7932 |
1.2048 |
Spot |
6.3461 |
5.1564 |
5.3565 |
|
Support 1 |
11.5200 |
1.6500 |
6.5575 |
7.7490 |
1.2000 |
Support 1 |
6.0800 |
5.1050 |
5.3040 |
|
Support 2 |
11.4400 |
1.5725 |
6.4295 |
7.7450 |
1.1800 |
Support 2 |
5.8085 |
4.9115 |
4.9410 |
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 |
|
Resist 2 |
1.4604 |
1.6493 |
77.11 |
0.8294 |
0.9843 |
1.0776 |
0.8621 |
112.36 |
127.05 |
|
Resist 1 |
1.4527 |
1.6400 |
76.89 |
0.8244 |
0.9811 |
1.0742 |
0.8585 |
111.58 |
126.04 |
|
Pivot |
1.4456 |
1.6328 |
76.76 |
0.8182 |
0.9784 |
1.0682 |
0.8522 |
111.01 |
125.35 |
|
Support 1 |
1.4379 |
1.6235 |
76.54 |
0.8132 |
0.9752 |
1.0648 |
0.8486 |
110.23 |
124.34 |
|
Support 2 |
1.4308 |
1.6163 |
76.41 |
0.8070 |
0.9725 |
1.0588 |
0.8423 |
109.66 |
123.66 |
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 |
|
Resist. 3 |
1.4644 |
1.6485 |
77.55 |
0.8323 |
0.9884 |
1.0871 |
0.8687 |
112.54 |
126.73 |
|
Resist. 2 |
1.4596 |
1.6441 |
77.33 |
0.8291 |
0.9858 |
1.0831 |
0.8652 |
112.10 |
126.31 |
|
Resist. 1 |
1.4547 |
1.6397 |
77.11 |
0.8258 |
0.9831 |
1.0790 |
0.8617 |
111.66 |
125.88 |
|
Spot |
1.4450 |
1.6308 |
76.67 |
0.8193 |
0.9778 |
1.0709 |
0.8548 |
110.79 |
125.03 |
|
Support 1 |
1.4353 |
1.6219 |
76.23 |
0.8128 |
0.9725 |
1.0628 |
0.8479 |
109.92 |
124.18 |
|
Support 2 |
1.4304 |
1.6175 |
76.01 |
0.8095 |
0.9698 |
1.0587 |
0.8444 |
109.48 |
123.76 |
|
Support 3 |
1.4256 |
1.6131 |
75.79 |
0.8063 |
0.9672 |
1.0547 |
0.8409 |
109.04 |
123.33 |
v
Written by: John Kicklighter, Senior Currency Strategist for DailyFX.com
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