The Forex Daily Digest – September 17, 2009
The USD fell against its major rivals after an uptick in homebuilders' sentiment added to stocks' gains and encouraged sellers of low-yielding assets. The USD fell throughout during the U.S. session, depressed by a fresh show of strength to U.S. manufacturing gave investors new reasons to buy stocks and higher-yielding currencies and dump safe-haven securities such as the dollar.
An independent survey shows that investors have turned the most bearish on the USD in 18 months as signs of a recovery in the global economy reduced demand for the currency as a refuge. According to currency analysts, the USD will fall and Treasury yields will rise over the next six months. This outlook on the economy improved for a second month, after saying it worsened every month since the index began in November 2007.
The Federal Reserve reported that industrial production jumped 0.8% in August as factories boosted production of cars, machinery, food products, clothing and other goods. The latest report was slightly better than analysts expected. In other data yesterday, the consumer-price index rose 0.4% in August, which was in line with expectations. Core CPI, which excludes food and energy prices, increased 0.1%, as expected.
There reportedly is a growing divide among Federal Reserve policy makers on how quickly they should begin raising interest rates, causing U.S. government bonds to briefly sell off. According to a source, at issue is how quickly policy-makers should begin raising interest rates to head off inflation once the economy shows sustainable signs of growth.
U.S. equity markets seem to be moving forward at a faster pace as major indexes move toward a fresh round of new highs we haven’t seen since last year this time. Wednesday’s gains followed a strong reading of industrial production that helped stocks, extending the positive momentum from earlier in the week, when Federal Reserve Chairman Bernanke announced the recession is likely over.
The JPY is likely to extend losses against its major counterparts on speculation the biggest gain in U.S. retail sales in three years will ultimately encourage investors to sell the currency and buy riskier assets. Meantime, the CAD reached a six-week high against the USD as global stocks and oil rose, increasing the attractiveness of commodity currencies. Canadian factory sales advanced 5.5 percent to C$41.4 billion ($38.7 billion) in July, the fastest gain since 1997. The consensus estimate was for a 2.5 percent rise.
The NZD and the AUD, which like Canada’s rise and fall with stocks and commodity prices, outperformed all of the 16 most-traded currencies, rising 1.3 percent and 1.2 percent respectively. The USD lagged behind all of them but the GBP.
There are a number of major economic reports on the calendar today. You can expect the August Building Permits and Housing Starts. Initial Jobless Claims and Continuing Claims, as well as the Philly Fed Index are also scheduled for release.
On the earnings calendar today, watch for FedEx, Kingfisher Plc, Discover Financial, Palm Inc, Pier 1 Imports, and the Marcus Corporation.
Happy Trading,
James Dicks
An independent survey shows that investors have turned the most bearish on the USD in 18 months as signs of a recovery in the global economy reduced demand for the currency as a refuge. According to currency analysts, the USD will fall and Treasury yields will rise over the next six months. This outlook on the economy improved for a second month, after saying it worsened every month since the index began in November 2007.
The Federal Reserve reported that industrial production jumped 0.8% in August as factories boosted production of cars, machinery, food products, clothing and other goods. The latest report was slightly better than analysts expected. In other data yesterday, the consumer-price index rose 0.4% in August, which was in line with expectations. Core CPI, which excludes food and energy prices, increased 0.1%, as expected.
There reportedly is a growing divide among Federal Reserve policy makers on how quickly they should begin raising interest rates, causing U.S. government bonds to briefly sell off. According to a source, at issue is how quickly policy-makers should begin raising interest rates to head off inflation once the economy shows sustainable signs of growth.
U.S. equity markets seem to be moving forward at a faster pace as major indexes move toward a fresh round of new highs we haven’t seen since last year this time. Wednesday’s gains followed a strong reading of industrial production that helped stocks, extending the positive momentum from earlier in the week, when Federal Reserve Chairman Bernanke announced the recession is likely over.
The JPY is likely to extend losses against its major counterparts on speculation the biggest gain in U.S. retail sales in three years will ultimately encourage investors to sell the currency and buy riskier assets. Meantime, the CAD reached a six-week high against the USD as global stocks and oil rose, increasing the attractiveness of commodity currencies. Canadian factory sales advanced 5.5 percent to C$41.4 billion ($38.7 billion) in July, the fastest gain since 1997. The consensus estimate was for a 2.5 percent rise.
The NZD and the AUD, which like Canada’s rise and fall with stocks and commodity prices, outperformed all of the 16 most-traded currencies, rising 1.3 percent and 1.2 percent respectively. The USD lagged behind all of them but the GBP.
There are a number of major economic reports on the calendar today. You can expect the August Building Permits and Housing Starts. Initial Jobless Claims and Continuing Claims, as well as the Philly Fed Index are also scheduled for release.
On the earnings calendar today, watch for FedEx, Kingfisher Plc, Discover Financial, Palm Inc, Pier 1 Imports, and the Marcus Corporation.
Happy Trading,
James Dicks
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