FOREXYARD: Forex News Blog | |
- US Industrial Production Sluggish
- New York Manufacturing Still in Decline
- CPI Data Conflicts as Core Numbers Rise
- Weekly Fundamental FX Preview – European and US Crises
- European Bank Stress Tests Due Today
- Bernanke Hits the Brakes on QE3
| US Industrial Production Sluggish Posted: 15 Jul 2011 08:46 AM PDT
This afternoon's publication of US industrial production came out below forecasts, growing a dismal 0.2% in June. As reports reveal persistently nagging declines in growth, US confidence levels are expected to decline. The reports from the University of Michigan (UoM) are expected later this afternoon and could underline this relative decline. Forecasts have the UoM Prelim Consumer Sentiment report growing by a small amount, but given recent slowdowns in industry and manufacturing, as well as the looming fear of a debt default, may have dragged this indicator lower. The result will likely be a turn to safe-havens; helping to lift the value of the US dollar (USD) prior to the week's close. |
| New York Manufacturing Still in Decline Posted: 15 Jul 2011 08:44 AM PDT
The fleeting idea that manufacturing was regaining its foothold was set back today as the Empire State Manufacturing Index revealed a downturn. The index moved from last month's sharp decline to a somewhat lesser decline. Forecasts had expected the index to move back into positive territory this month given news that manufacturing was on the rise globally once more. But the persistent bearishness has darkened the landscape a bit as many view the index's afternoon reading as a sign that more sluggishness may be impending. |
| CPI Data Conflicts as Core Numbers Rise Posted: 15 Jul 2011 08:41 AM PDT
The US Bureau of Labor Statistics today published the second set of inflationary data in as many days, this time covering the consumer price index (CPI), as compared with yesterday's producer price index (PPI). The contradictory data from the CPI readings this afternoon is in line with similar figures regarding PPI and Retail Sales from yesterday. Basically, the report shows the value of the more volatile price instruments undergoing a downshift while the core figures which exclude these volatile items reveals modest growth. The Core PPI and CPI numbers both revealed modest increases of 0.3%, which has helped solidify the commentary by Fed Chairman Bernanke that another round of easing may get delayed as more data rolls in. |
| Weekly Fundamental FX Preview – European and US Crises Posted: 15 Jul 2011 06:39 AM PDT
Another week passes and the European debt crisis still remains unsolved. An intensification of the situation was seen this week as bond vigilantes set their sights on Italy as Italian 15-year bonds climbed to 5.9%, a level where some fixed income analysts believe the Italian debt burden would become unstable. As Europe fails to address the situation with a sense of urgency, market participants will not likely bury their heads in the sand. The European elite are back at the drawing board attempting to craft a solution to the Greek debt crisis that will avoid a credit event, something the ECB has been adamant about. But Germany is in no such hurry to settle given the German and Dutch insistence on the bondholders taking a haircut. Germany appears willing to delay the issue and sees no need to meet until a feasible plan has been organized. At this time Greece looks to be fully funded due to additional EU/IMF funding but as the crisis carries on the possibility that additional nations’ bonds will come under pressure increases, much in the way Italy has this week. Moving to the other side of the pond Obama put the ball in the corner of the Republicans when he walked out of the last debt ceiling negotiations and S&P has officially put the US on a rating watch as the August 2nd deadline creeps nearer. However, the market did not send the USD lower in response to the news. Yields in the US 10-year yield continue to trade below 3%, showing market expectations are for a shoe string deal to be hatched before the deadline. Rather FX participants have chosen to focus on the possibility of QE3, (see Wednesday's price action) or a lack there of (see Thursday's price action). Despite today's headline inflation number which contracted by -0.2%, core CPI rose actually rose by, 0.3%, and should put the issue of QE3 to bed barring any subsequent market shock or dramatic downturn in US growth or unemployment numbers. Read more forex trading news on our forex blog. |
| European Bank Stress Tests Due Today Posted: 15 Jul 2011 04:19 AM PDT
The euro initially moved lower as stocks moved into the red amid worries prior to the release of European bank stress tests. The test is administered by the European Banking Authority which will examine the levels of sovereign debt held on the trading books of 91 European banks. One may be skeptical of the testing as it only examines debt that banks currently hold as available for sale. The stress tests will not look at bonds that are not held for sale, therefore the test may miss a large part of the exposure European banks may have to peripheral European sovereign debt that could face a haircut. Nevertheless previous European bank stress tests have helped to build market confidence and this case should be no different. Short-term resistance for the EUR/USD comes at 1.4200 and a break here could target the 100-day moving average at 1.4290. Movement in the majors has quieted as traders look towards US CPI at 12:30 GMT. The dollar will likely bounce higher should the core report show higher than the 0.2% rise as expected. Sterling is down versus the dollar and the euro. A speech later by BOE MPC member Paul Tucker, considered a hawk on inflation, may talk up the need for addressing inflation concerns. However, sterling's direction may be subject to events in Europe and in the US. Cable has resistance at 1.6240 from the falling trend line off of this year's high. Read more forex trading news on our forex blog. |
| Bernanke Hits the Brakes on QE3 Posted: 15 Jul 2011 12:02 AM PDT
In yesterday's testimony before the Senate Banking Committee Bernanke put the brakes on expectations for another round of bond purchases by the Fed as the USD recovered some of its declines over the past two days. Today's CPI data and European bank stress tests will likely set the tone going into the weekend and perhaps provide further USD strength. Today's Key Economic Events: USD – Core CPI m/m – 12:30 GMT USD – Prelim UoM Consumer Sentiment – 13:15 GMT EUR – Bank Stress Test Results – 16:00 GMT Read more forex trading news on our forex blog. |
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