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Daily Forex Strategy Briefing
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USD Mostly Higher Ahead of FOMC
Mon, Aug 4 2008, 23:23 GMT
by Hans Nilsson
USD Mostly Higher Ahead of FOMC
- The dollar rose against most of its rivals Monday after US personal income and spending exceeded expectations. The greenback traded near a one-month high on expectations the Federal Reserve will keep its benchmark rate unchanged at 2.0% when policy makers meet tomorrow. The euro gained as the eurozone PPI rose to a record high. The AUD/USD is testing support at the 0.93 area. The USD/CAD rallied as the 1.03 resistance was broken. The yen fell slightly as US stocks rebounded as oil prices weakened.
- The GBP/USD fell after a report showed the UK construction industry shrank in July at the fastest pace in 11 years, raising speculation the Bank of England will cut interest rates. The pair is in a short-term downtrend, likely to test support at 1.95. We expect further deteriorating UK economic outlook and lower interest rates.
Financial and Economic News and Comments
US & Canada
- US consumer spending rose a stronger-than-expected 0.6% m/m and personal income unexpectedly increased 0.1% m/m in June, the Commerce Department said. Personal income rose 5.7% y/y and personal consumption rose 5.3% y/y in June. Disposable personal income (income after taxes) fell 1.9% m/m in June but is up 7.6% y/y.
- The overall PCE deflator rose 0.8% m/m in June, up 4.1% y/y. The core PCE deflator, the Fed’s preferred price gauge, which excludes food and energy, increased a stronger-than-expected 0.3% m/m in June, up 2.3% y/y. After adjusting for inflation, real consumption fell 0.2% m/m in June, up only 1.2% y/y, so consumers keep spending but get less for their money as inflation reduces the real value of consumption.
Europe
- Euro-zone producer prices rose 8.0% y/y in June, the highest since records began in January 1990, largely driven by energy costs.
Asia-Pacific
- Australian house prices fell in Q2 2008 for the first time in almost three years. The price index for house prices in the nation’s eight capital cities fell 0.3% q/q in Q2, the Australian Bureau of Statistics said.
FX Strategy Update
Published on Mon, Aug 4 2008, 23:27 GMT
Archive
- Greenback Modestly Lower as Stocks Recover
Published On Tue, Dec 2 2008, 23:38 GMT - Global Contraction Deepening and US Officially in Recession
Published On Sun, Nov 30 2008, 22:16 GMT - Yen Falls as Stocks Gain for Fourth Day
Published On Wed, Nov 26 2008, 23:25 GMT - Greenback Falls on Fed's Quantitative Easing
Published On Tue, Nov 25 2008, 23:56 GMT - USD and JPY Decline as Risk Appetite Returns
Published On Mon, Nov 24 2008, 23:27 GMT
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Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.
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