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Chicago PMI Data Awaits

Discussion in 'Forex Daily News & Outlook' started by mercaforex, Aug 31, 2009.

  1. mercaforex

    mercaforex New Member

    Jul 1, 2009
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    By Mercaforex

    The USD managed to maintain its consolidated ranges headed into the weekend against most of the major currencies, the lone exception being the JPY which gained against the greenback. The past couple of weeks have seen range trading take place as volume decreased significantly due to the summer holidays for a large number of investors, which caused international bourses –including Wall Street – to become rather inconsistent. It will be a rather big week for data, but with one more ‘true’ week of summer trading left before the Labor Day holiday unfolding in the States - it remains questionable what results will unfold and what will be able to be deciphered from the market action. The Chicago PMI data is on schedule today and a reading of 47.4 is expected which would be an improvement over last month’s result.

    This is the last day of trading for the month of August and we have seen bulls on the equities markets be able to hold onto their ground. Yet the concern is what will take place in the months of September and October which are notoriously volatile trading days when there are economic concerns. And no matter what governments, including the U.S. officials, are saying, fears persist about the overall health of the world economies. While there is plenty of talk about a recovery around the corner, evidence continues to be sought by investors. Friday will bring us the Non Farm Employment Change numbers and this will find a sounding board. Also worthy of comment was a report late last week, that stated that the number of banks in the U.S with ‘internal problems’ has actually grown rather large in the past month, producing the biggest list in fifteen years. The USD has essentially traded within a tried and true range against the EUR and GBP the past couple of weeks and we may see this continue to be a constant until direction is mustered from the throngs of investors returning from their summer slumber.

    The EUR found a familiar road on Friday as it moved in a rather sterile framework against the USD. The ECB interest rate decision looms this coming Thursday. While there is little chance that the European Central Bank will be daring enough to raise their key rate, what investors will want to hear is President Trichet’s comments about the health of the European economy. Germany will release its Retail Sales report tomorrow and this will be looked at closely while traders try to determine if it is truly possible that Europe has turned a significant corner. In regional voting within Germany yesterday, Angela Merkel’s ruling party suffered losses and this may signal trouble for the German leader when a national election is held. Italy will release their Retail Sales figures today and the broad European CPI Flash Estimate is due but most eyes will be on the lookout for the German figures tomorrow and for signposts from the ECB later this week. The EUR has found itself in a particularly strong range against the USD as of late and awaits a push.

    Sterling has found itself in the midst of a rather consolidated range against the USD. Today is a banking holiday in the U.K. and trading in the GBP should be rather light. Tomorrow upon their return to the market place, British traders will receive Manufacturing PMI data and supposedly the Halifax HPI (if it is actually released without delay). The U.K. and its politicians have largely been taking a positive approach when speaking about the economy and extolling the belief that the worst of the financial crisis is now behind it. Housing data has shown some signs of improvement, but there remains a troop or two of investors who are cautious and it should be noted that the Bank of England remains rather tame about its outlook for the U.K too. The GBP has not found much support the past few weeks after a rather impressive run of luck the first half of the year. Having stagnated as of late investors should be watching the Sterling closely.

    The JPY turned in a rather strong performance in early trading against the USD, this on the momentum of a rather interesting election result in Japan which saw an opposition party take leadership. The JPY has climbed to a near two month high against the USD, but it remains to be seen if it can really break free from what has been a consolidated band for quite a while. Gold trading like much of the marketplace has remained muted the past couple of weeks as investors await the end of the summer trading doldrums. Many questions still exist regarding the health of the Japanese economy. Also worthy of note regarding the Asian markets is the steep decline in the Chinese Shanghai bourse this August

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