This Week's Data and Events
The US currency consolidated during the past week and the same should happen during the last week of August and ahead of the Labor Day holiday. The geopolitical pressures have (officially) alleviated, but all eyes should remain on commodities. The dollar remains overbought in the short term, but any corrective decline this week should be brief and shallow. This is because most of the market missed buying dollars on July 22 and is waiting for the second chance.
This Week's Data and Events
United States
The US economic calendar will start on Monday with the release of the existing home sales report for July. It's hard to expect a good number, so it should carry no weight.
Tuesday will see the release of the new home sales report for July and of the Conference Board's consumer confidence report for August. The latter one might move the market.
The volatile durable goods orders report for July is due on Wednesday.
Thursday will see the revision of the second quarter GDP.
Friday before the long weekend we will face an avalanche of significant data: personal income and spending reports for July, the Chicago PMI report for August, the University of Michigan survey for September, and the core PCE deflator report for July.
The Eurozone
The Eurozone economic agenda will begin on Tuesday with the release of the German IFO Business Climate Economic report for August and of the revision of the German second quarter GDP. Only a modest improvement is likely in the IFO report.
Italy's Consumer Confidence Index report for August is due on Wednesday.
Thursday will be a busy day for the Eurozone. Be on the lookout for Germany's unemployment rate for August, and the Eurozone Retail PMI, Business Climate Indicator, Consumer Confidence, Economic Sentiment Indicator, and Industrial Confidence reports for August.
The Eurozone unemployment rate report for July is due on Friday.
Japan
The Japanese economic data for July will be released as a large batch on Friday: it includes the unemployment rate, household living expenditure, industrial production, retail trade, housing starts and national CPI.
The Tokyo CPI report for August is due on Friday as well.
The UK
The UK markets are closed on Monday.
The agenda will start on Thursday with the release of the Nationwide house prices and of the CBI distributive trades survey reports for August.
The GfK NOP consumer confidence report for August is due on Friday.
Canada
Canada's economic agenda only features the monthly GDP for June.
Past Week's Data and Events
United States
The US financial woes are very far from being solved, and they go well beyond Fannie Mae and Freddie Mac. Consolidation/bankruptcy among large name in the industry should continue, and in addition to that we have to gauge the ongoing impact of the housing sector crisis on US employment and consumer confidence. It all sounds horrible, but the rest of the world is only starting to experience this weakness. Events that only months ago would have propelled the oil prices, the Russian destruction of Georgia and the tropical storm in the Gulf, are now ignored. The oil price is going down on long liquidation and this means the dollar should strengthen further in the medium term. And the trigger for the second wave of buying can be pulled at any time.
Housing starts melted away another 11.0 percent to an annual rate of 965,000 units in July from the upwardly revised June estimate of 1.084 million units. On an annual basis, they contracted 29.6 percent. Building permits tumbled 17.7 percent to an annual rate of 937,000; on annual basis the damage was 32.4 percent. The horror show must go on!
The National Association of Homebuilders/Wells Fargo sentiment index remained unchanged at 16 in August. Readings under 50 mean the conditions are poor.
Producer price index jumped 1.2 percent in July following an unrevised 1.8 percent increase in June. On an annual basis, PPI expanded 9.8 percent. The core producer price index rose 0.7 percent in July after edging up 0.2 percent in each of the two previous months.
Claims for initial unemployment benefits decreased to 432,000 from the previous week's downwardly revised figure of 445,000. What is highly unusual is that the previous week's number was revised down from 450,000 because the revisions are nearly 100 percent revised upward - that means they do that only 99 percent!
The Conference Board's leading economic indicators fell 0.7 percent in July after being in unchanged in June. Recession? Of course.
Philly Fed Factory Index improved to-12.7 in August from -16.3 in July. No good news here, the last time we had a positive report was back in November.
The Eurozone
The euro/dollar made only a weak retracement last week on profit taking, as evidence of economic weakness in the Eurozone is piling up. There is no decoupling, or if you wish, an economic re-coupling.
The French index of manufacturing confidence declined to 92 in July, the lowest since May 2003, from 95 in June.
German investor confidence improved to - 55.5 in August from - 63.9 in July, the lowest since the survey began in 1991, according to the ZEW Center. Nice, but that is still a very weak number.
Along the same lines, the ZEW economic sentiment for the Eurozone rose 8 points to -55.7 in August. Still a bad number, I'm afraid.
German producer-price inflation rose 2 percent in July and accelerated to 8.9 percent on the year, the fastest pace since October 1981.
The Eurozone trade came in at -0.1 billion euros in June from -4.6 billion euros (revised from -3.9 billion euros) in May.
The Eurozone construction output contracted 0.6 percent in June and 2.4 percent on a yearly basis.
The Eurozone services PMI dipped to 48.2 in August from 48.3 in July, while the manufacturing PMI edged up to 47.5 from 47.4 in July. Both numbers suggest that the Eurozone will slip into technical recession in the third quarter. The German index fell to 50.3 from 52.2, the lowest in five years, and the French index was unchanged at 47.0.
The Eurozone current account deficit came in at -1.0 billion euros in June, while the regional industrial new orders contracted 0.3 percent during the same period.
Japan
Dollar/yen made a failed attempt to correct lower last week, but the uptrend remains intact. But expect choppy trading during the last week of official vacation.
The final leading index for June came in at 91.3, up from 91.2, while the final coincident index slipped to 101.6 from 101.7.
There was no reaction to news that all industry activity index fell 0.9 percent in June, as expected.
The merchandise trade balance in Japan contracted 86.6 percent to 91.1 billion yen in July on a yearly basis from the revised 121.9 billion yen surplus in June. The trade balance with the United States fell 19 percent on the year. Imports jumped 18.2 percent from a year earlier, while exports rose 8.1 percent.
The final machine tool orders report fell 3.6 percent in July after another 3.5 percent fall in June. On an annual basis, orders contracted 8.9 percent in July and 2.7 percent in June.
The UK
Sterling/dollar consolidated in an inside range last week, but remains just above the low price of the sharp decline. There aren't too many spots of light in the local economy, so any recovery of cable should be temporary.
The UK second quarter GDP was revised downward to unchanged from 0.2 percent, while the annual growth was only 1.4 percent, the weakest since 1992. Given the weakness seen in the past several months that's hardly a surprise.
The house prices fell 2.3 percent in August and 4.8 percent on the year, the weakest reading since 2002, according to Rightmove. No surprise here, the housing sector remains in trouble.
CBI industrial trends survey worsened to -13 in August from -8 in July.
Minutes from the Bank of England's MPC meeting on August 7th emphasized a shift in the MPC outlook. The policy makers split three ways, with one arguing for higher rates to fight inflation, another voting for a cut to fight recession, and the others wanting to keep the benchmark rate at 5 percent.
UK business investment fell 1.9 percent in the second quarter.
Retail sales unexpectedly expanded 0.8 percent in July after contracting a downwardly revised 4.3 percent the month before (-3.9 percent initially), which was the biggest decline since at least 1986.
Canada
Dollar/Canada fell for the second week despite the fact that the commodities declined as well. And strong economic data only painted half of the picture.
Wholesale sales rose 2 percent to C$45.2 billion in June, the fastest pace in 16 months, and the May's gain revised down to 1.5 percent from the initially reported 1.6 percent.
Meanwhile, Consumer Price Index rose 3.4 percent in July on an annual basis from 3.1 percent in June. The core CPI rate rose 1.5 per cent in July for the fourth consecutive month.
Retail sales rose 0.5 percent in June, the fourth consecutive month of gains, after a downwardly revised 0.3 percent gain the month before. It wasn't a good number, as excluding high gasoline prices, retail sales would have contacted 0.4 percent.
The index of leading economic indicators was unchanged for a second straight month in July.
Switzerland
The dollar/Swiss franc failed to hold above the rising channel line last week, some profit taking on long positions is likely - but only on a temporary basis.
Switzerland June retail sales expanded only 0.7 percent on a yearly basis.
Australia
The Australian dollar consolidated in an inside range last week after sinking sharply for a month. The RBA is set to cut rates in early September and the economy is slowly faltering. Use the commodity prices for guidance, but remember that Australia doesn't have oil to export.
The leading index edged up 0.1 percent in June, according to Westpac.
Cornelius Luca
http://www.gftforex.com
DISCLAIMER: This forum and the information provided here should not be relied on as a substitute for extensive independent research before making your investment decisions. Global Forex Trading is merely providing this column for your general information. The views of the author are not necessarily those of Global Forex Trading, its owners, officers, agents or employees. In addition, any projections or views of the market provided by the author may not prove to be accurate. Global Forex Trading and Cornelius Luca will not be responsible for any losses incurred on investments made by readers and clients as a result of any information contained in this column. Global Forex Trading and Cornelius Luca do not render investment, legal, accounting, tax, or other professional advice. If investment, legal, tax, or other expert assistance is required, the services of a competent professional should be sought.
|
