Weak data out of Europe helped the USD extend gains modestly in the London session. French industrial production was a weaker than expected 0.2% with the annual rate now running at -1.2%. Meanwhile, Euro-zone economic confidence slipped to 88.8 in August from 89.5 while the consumer price estimate was a tamer than expected 3.8% in August after a 4.1% print previously. This mix of weak economic activity and seemingly easing inflation pressures keeps prospects for 2009 ECB rate cuts in play.
The price action was relatively modest as traders await US economic data out in the NY morning. EUR/USD closed London trading near 1.4720, shedding about 30 pips in the session. We would expect a good round of US economic data to send the pair back down through the 1.4700 mark. GBP/USD followed suit, shedding 45 pips to a close near the 1.8290 level.
USD/JPY was lower as the market expects stocks in the US will open with a weak tone today. The pair opened London trading near 109.05 and was down about 30 pips at the close. USD/CAD also lost some ground as oil continued to trade near the relatively lofty $117 area on continued concerns about Hurricane Gustav. Loonie shed about 30 points towards a close near 1.0475.
Data on tap in the NY session should see some FX price action ahead of the weekend. Scheduled are US personal income/spending, Chicago PMI, University of Michigan consumer confidence and Canadian monthly GDP. Look for a weaker than expected Canadian GDP to be offset somewhat by lofty oil prices while better than expected US data points should see the buck back towards the highs of the last few days.
Upcoming Economic Data Releases (NY Session):
- 8/29/2008 12:30 GMT CA Industrial Product Price MoM JUL 1.30% 0.80%
- 8/29/2008 12:30 GMT CA Gross Domestic Product MoM JUN -0.10% 0.10%
- 8/29/2008 12:30 GMT CA Raw Materials Price Index MoM JUL 4.40% 0.20%
- 8/29/2008 12:30 GMT US Personal Income JUL 0.10% 0.00%
- 8/29/2008 12:30 GMT US Personal Spending JUL 0.60% 0.30%
- 8/29/2008 12:30 GMT US PCE Core (YoY) JUL 2.30% 2.40%
- 8/29/2008 13:45 GMT US Chicago Purchasing Manager AUG 50.8 50
- 8/29/2008 14:00 GMT US U. of Michigan Confidence AUG F 61.7 62
