• Home ::
• Technical ::
• Market View ::
• Forex Daily Overview

• Send
• Print
• Add To
• Rss

Forex Daily Overview

3c6407d4-62a4-4315-9328-037d8d43cef4

7

0

USD rebounds as US consumer confidence falls

Tue, Jun 30 2009, 16:26 GMT
by Michael J. Malpede

Easy Forex

• USD: Higher, risk appetite takes a 360 degree turn as consumer confidence falls and equities trade lower
  
• JPY: Lower, unemployment rises to 5 1/2 year high, household spending and manufacturing PMI rise
  
• EUR: Lower, inflation falls by 0.1%, money supply growth slows
  
• GBP: Lower, house prices rise, GDP contracts by the most 51 years
  
• CAD and AUD: AUD & CAD lower, Australian home sales decline, Canada's raw material prices rise
  

Overview

USD traded higher rebounding from losses in overseas trade. USD was supported by today’s release of weaker than expected NY NAPM and a decline in US consumer confidence. The employment component of the NY NAPM declined generating concern that Thursday’s US unemployment report may be weaker than expected. The decline in US consumer confidence generates uncertainty about the US economic outlook. These reports sparked a decline in US equities and flight to safety demand for USD. USD opened lower Tuesday pressured by improving risk sentiment as Asian equity markets rise and Deutsche Bank AG raises its global economic forecast. The Nikkei rallied 1.8% sparking the initial wave of USD selling pressure. Deutsche Bank AG raised its global economic forecast for 2010 to 2.5% from its earlier estimate in March of 2%. In addition, the VIX index dropped to its lowest level since the financial crisis emerged last September. The VIX index is used as a gauge to measure investor risk appetite. FX price moves were somewhat constrained by month end quarter end position squaring and a mixed performance in European and US equity markets as the global economic outlook remains uncertain. GBP experienced a volatile session trading at new highs for 2009 supported by a report that UK housing prices rose in June. GBP came off its highs in reaction to report that UK Q1 GDP contracted at its fastest in 51 years. Economic data was also mixed in Japan and in the EU. Japan's unemployment rate rose to 5 1/2 year high, with household spending and manufacturing posting modest improvement. EU inflation continued to fall in June and May M3 money supply posted a modest rise. The commodity currencies continue to benefit from rising crude prices sparked by Nigerian turmoil. AUD opened higher despite report of a sharp drop in Australian home sales and weaker private sector credit growth. Canadian economic data was mixed with GDP coming in as expected and Canada's raw material prices posting a modest rise in May. Canada’s producer prices fell more than expected. The commodity currencies turned lower as US stocks and crude oil traded lower for the day. USD rebounded in reaction to disappointing US consumer confidence and weak New York NAPM. These reports discouraged risk appetite and fueled safe haven demand for the USD. This week's main focus will be the release of US unemployment for June and ECB policy meeting Thursday. US unemployment is expected to rise but at a slower pace. ECB officials have indicated that current monetary policy is appropriate and no change is expected from the ECB at Thursday's meeting.

Today’s US data:

April Case Shiller home price index came in at -18.0, a reading of -18.8 was expected. June consumer confidence falls to 49.3 from 54.8 in May, a reading of 55 was expected. NY NAPM declined to 44.8 from 61.3 last month. Chicago PMI rise to 39.9 from 34.9 in May, a reading of 39 was expected. Equities turned lower post release of the consumer confidence data. USD rallied supported by a drop in risk appetite.

Upcoming US data:

On July 1st May Construction spending, June ISM manufacturing index and May Pending Home Sales Index will be released. Construction spending is expected to fall 0.5% compared to a 0.8% rise last month. The ISM manufacturing index is expected to improve to 44 from 42.8 in May. Pending home sales are expected to rise to 92.5 from 90.3 last month. On July 2nd initial jobless claims for the week ending 6/26 will rereleased expected at 610k compared to 627k last week. On July 2nd June nonfarm payrolls and unemployment will be released. The nonfarm payrolls are expected at -368 k from -345k and the unemployment rate is expected to rise to 9.6% from 9.4% last month. May factory orders will also be released on July 2 nd expected to rise 0.1%.

• Download full Forex Daily Overview with charts

Published on  Tue, Jun 30 2009, 16:29 GMT