Trading Economic News - Page 41

Sean Hyman · #**601** (**permalink**) 08-25-2009, 01:45 PM

The New Zealand dollar got a boost from the report that shows "increasing inflation expectations" last night.

Why? Higher inflation has to be tackled by raising interest rates. Investors love to get a higher interest rate on their money...so money flows into the New Zealand dollar upon the expectations that New Zealand's rates will be going higher in the months ahead.

John Rivera · #**602** (**permalink**) 08-26-2009, 11:12 AM

Strong U.S. Durable Goods Orders and U.S. New Home Sales helped drive the dollar higher today or was it a pull back in risk appetite that was seen across most equity markets. However, we are seeing U.S. equities higher on the day which negates the argument a bit, but it is still difficult to pin bullish dollar sentiment on fundamentals as we have seen the greenback weaken over the past week on rising equity markets. Next week's NFP release could be a watershed moment for the greenback. Early forecasts are for -200,000 and if it continues the recent trend of significantly beating estimates then we could see a print below 100,000. That would put the U.S. economy on the verge of job creation which could be the trigger to switch the dollar paradigm from risk to fundamentals.

Sean Hyman · #**603** (**permalink**) 08-26-2009, 01:02 PM

Aug. 26 (Bloomberg) -- The U.S. economy needs the stimulus from low interest rates for some time as it begins a “fragile” recovery from the worst recession since the 1930s, said Dennis Lockhart, president of the Federal Reserve Bank of Atlanta.

“Overall, the U.S. economy is improving but still fragile,” Lockhart said today in remarks prepared for a speech in Chattanooga, Tennessee. “The FOMC has stated its intention to keep the policy interest rate low for an extended period. I agree that this approach is needed.”

Fed Chairman Ben S. Bernanke said last week that the U.S. economy “appears to be leveling out” and may resume growth “in the near term.” A government report today showed purchases of new homes rose 9.6 percent in July, the most since February 2005, adding to evidence the housing slump that triggered the recession is hitting bottom.

John Rivera · #**604** (**permalink**) 08-27-2009, 11:21 AM

The second reading of U.S. GDP was released and held at 1.0% despite expectations of a decline to -1.3%. A rise in personal consumption was offset by a drop in gross fixed investment. The decline most likely means that the labor market will remain weak going forward as the lack of new projects will negate the need to hire. Indeed, we saw jobless claims remain above 550,000 for another week. Although we saw a drop in continuing claims, it may be attributed to benefits expiring for Americans who have been out of work the longest.

Sean Hyman · #**605** (**permalink**) 08-27-2009, 11:38 AM

Massive breakout in Gold coming which will also likely swing the dollar one way or another too...not to mention the Aussie dollar.

Watch to see which way gold breaks out.

The higher probability direction is upward, but allow the price to close outside of the triangle to see which direction it will likely trade in.

Mostly Harmless · #**606** (**permalink**) 08-29-2009, 04:16 AM

.

The two most significant fundaments I heard during 2008 (which still ring in my ears):

1. Obama said pre-election that RMB is undervalued. That sure doesn't sound like someone committed to a strong USD.

2. China's Premier said a little over a year ago that Americans should save more and spend less (and that his own citizens should do the reverse). That sure doesn't like a China planning its future on export dependence to USA as before.

I'll bet the Chinese guy is still praying that USA citizens will indeed save more so he can safely withdraw his 800b treasuries one rainy day - without losing half it to a run on the dollar.

.

John Rivera · #**607** (**permalink**) 08-31-2009, 11:37 AM

The Chicago PMI reading touching 50.0 which is the boom/bust level helped erases concerns that were generated by the decline in Chinese stocks. The data continues the trend of improving activity in the U.S. which we could see in tomorrow's ISM reading. If we see a similar improvement in the broader reading then the greenback could be back on the defensive. Additionally, if we see significant improvement in the employment component, expectations for the NFP report on Friday will rise. The employment report will be an interesting release with the holiday weekend to follow, a recipe of low volumes and significant event risk could lead to extreme volatility.

John Rivera · #**608** (**permalink**) 09-01-2009, 03:05 PM

The early indicators for Friday's employment report cross the wires tomorrow. Challenger job cuts and the ADP private employment report are expected to continue the theme of an improving labor market going. Early forecast are for the ADP report to show a job loss of -250,000 which would be a significant improvement from July's -371,000. This could signal that the NFP forecast for an improvement from -247,000 to -225,000 is conservative and a upside surprise could be in store. The private employment report is always good for a short bout of volatility and tomorrow should be no different.

Sean Hyman · #**609** (**permalink**) 09-01-2009, 04:54 PM

Quote:

Originally Posted by John Rivera

The early indicators for Friday's employment report cross the wires tomorrow. Challenger job cuts and the ADP private employment report are expected to continue the theme of an improving labor market going. Early forecast are for the ADP report to show a job loss of -250,000 which would be a significant improvement from July's -371,000. This could signal that the NFP forecast for an improvement from -247,000 to -225,000 is conservative and a upside surprise could be in store. The private employment report is always good for a short bout of volatility and tomorrow should be no different.

Yeah, with improving ISM numbers, we stand a chance for a better NFP number. Will be interesting to watch.

Sean Hyman · #**610** (**permalink**) 09-02-2009, 10:50 AM

If AUD/USD can't push higher on that awesome GDP growth report overnight...then the market favors a "short sell" vs. being a buyer at this time (in my opinion).

John Rivera · #**611** (**permalink**) 09-02-2009, 02:59 PM

The positive Australian growth figures and hawkish comments from RBA Governor Stevens following its recent rate decision has significantly raised interest rate expectations. This could be a supportive factor and help the AUD/USD finally clear resistance at 08.375-61.8% Fibo of 0.9852-0.6009. However, increasing pessimism over the scope of a global recovery could see the pair break lower from its current range with potential to 0.7932-100-Day SMA.

Sean Hyman · #**612** (**permalink**) 09-03-2009, 11:24 AM

Don't forget that both U.S. and Canadian employment numbers come out tomorrow as well as the CAD Ivey PMI & Geithner speaking.

Plus tomorrow kicks off a G-20 meeting with the Finance Ministers, Geithner and others.

They will be setting the stage for their central bankers to meet together a few weeks from now.

So keep these news events in mind. Lots of stuff coming up!

Rrossi333 · #**613** (**permalink**) 09-07-2009, 11:58 AM

If you had to choose only one, which one would it be?

Sean Hyman · #**614** (**permalink**) 09-08-2009, 11:02 AM

Quote:

Originally Posted by Rrossi333

If you had to choose only one, which one would it be?

Rrossi, I wouldn't choose just one. Fundamentals tell you "what" is best to trade. Technicals tell you "when" is best to trade that fundamental signal.

I look at year over year fundamental trends to see which currencies tend to be the strongest and weakest. Then I trade the strongest vs. the weakest WHEN I get a technical buy signal.

So I see an edge by trading/knowing both.

For instance, AUD has gone up the most this calendar year so far. It's also had the best fundamentals. So I don't think that was a surprise. However, pure technicals probably wouldn't tell you that AUD was the strongest of all of the currencies but it would be good in helping to determine Aussie buy points.

So I use both and feel they both compliment each other rather than contradict each other when viewed in that fashion. Hope this helps.

I do want to be clear though that I don't see fundamentals as a "news event" to be traded in the short term but rather a "trend" of fundamentals that improve or worsen fairly consistently over time which shows where the economy is going/headed over time.

John Rivera · #**615** (**permalink**) 09-08-2009, 03:28 PM

The Fed Beige book is due out tomorrow and bears watching as it can have an impact on risk sentiment and interest rate outlooks. There isn't a numerical value associated with it as other economic releases which makes it difficult to trade on. However, watch for analysis after the report a slight change in the lanuguage can be market moving similar to the FOMC minutes. Last month saw several district report signs of stabilization. If we start to see those areas report prospects of growth and the lagging districts begin to stable then we could see a continuation of prevailing risk appetite.