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Overview of the main economical events of the current day - 24/09/2013
ECB President Mario Draghi Is Ready to Deploy Another Round of LTRO
The US dollar was traded slightly downwards on Monday to most major currencies amid no important US macrostatistics, stock markets decrease and euro-zone ambiguous statistics. The yen grew on the back of stock markets decrease and the euro was negatively affected by euro-zone manufacturing PMI decrease and also ECB President Mario Draghi’s speech. The Australian dollar looked better, which was favored by Chinese Manufacturing PMI growth.
US Flash Markit Manufacturing PMI dropped to 52.8 p. in September from 53.1 p. in August against the expected growth to 54 p. The decrease happened mainly due to the reduction of new orders and worsening of employment situation. The dollar couldn’t support Chicago Federal National Activity Index which exceeded the expectations in August and grew to +0.14 compared with -0.43 in July after having been at the negative territory for five months. Three month average of the index rose to -0.18 from -0.24.
Fed member William Dudley said on Monday that the economy was not yet so strong that the Fed could start reducing stimulation. Another Fed member Dennis Lockhart making speech on Monday also said that it would be difficult for the Fed to find a reason for tapering off QE at the nearest meeting on October as published economic data are ambiguous. Recently the dollar has been pressed by the political debate over government spending, which may have a negative effect on the US economic growth. Past Friday US president Barack Obama announced that if the Congress didn’t vote for raising the upper threshold of the public debt, another financial crisis may come into the country.
The euro was traded downwards despite the initial reaction to the landslide victory at the parliamentary elections in Germany on Sunday of the ruling party headed by Merkel who actually may have problems with forming a ruling coalition. Flash Manufacturing PMI of France, Germany and the whole euro-zone dropped in September although it was expected to rise. Euro-zone Manufacturing PMI dropped for the first time after 5-month growth – to 51.1 p. in September from 51.4 p. in August.
Meanwhile, the same Service indexes rose and turned out better than expected. Euro-zone Composite PMI grew to 52.1 p. – the highest reading since July, 2011 in comparison with 51.5 p. prior month. Some pressure on the dollar was put by the ECB President Mario Draghi’s speech in European Parliament where he said that the central bank was ready to use any instrument including LTRO if needed. Another round of the unlimited loans can weaken the euro.
Australian dollar was traded upwards after the release of HSBC Flash Manufacturing PMI which grew to 6-month high 51.2 p. in September against the August reading of 50.1 p. having exceeded the expectations and continued the growth for the second month in a row. China is the largest trade partner of Australia. Chinese economy will accelerate growth rates till the end of 2013, according to the world largest investment company BlackRock. Earlier the Bank of America, UBS and ING raised Chinese economic growth estimate for 2013 after Chinese industrial output statistics data in August showed the most significant growth for past 17 months.
By MasterForex Company
Overview of the main economical events of the current day - 25/09/2013
German Business Climate Growth Slowed Down
The US dollar was traded slightly upwards on Tuesday to most major currencies amid German Business Climate growth that fell out of expectations and amid the decrease of US Consumer Confidence from more than 5-year high.
S&P/Case-Shiller Home Price Index for 20 US megalopolises almost met the expectations and grew by 12.4% in July at an annual rate. FHFA House Price Index turned out a little better and rose by 1% in July; and it was forecasted to grow by 0.8%.
CB Consumer Confidence in the USA dropped from the highest reading since early 2008 of 81.8 p. in August to 79.7 p. in September against the expected decrease to 79.9 p. Current Assessment has risen slightly but the Expectations have considerably fallen in comparison with the prior month. Richmond Manufacturing Index also fell in September to 0 compared with +14 in August while it was forecasted to fall a little.
FOMC member William Dudley said on Tuesday that the Federal Reserve could start QE tapering off till the end of the year but it would depend on the economic situation. Meanwhile, according to the Goldman Sachs Janet Yellen may be named a new Fed chair next week.
The euro was traded downwards after the release of IFO report which showed that German IFO Business Climate rose to 107.7 p. in September from 107.6 p. in August while a growth to 108.4 p. was forecasted. IFO Expectations grew a little better than forecasted while IFO Current Assessment considerably dropped despite the expected growth. ECB Governing Council member Ewald Nowotny confirmed on Tuesday Draghi’s words that LTRO was discussed in the Executive Board and it is important that the ECB showed all its instruments.
The pound was traded downwards amid BBA Mortgage Approvals release that increased in August less than forecasted – to 38.2 thousand against the expected growth to 38.6 thousand. At the same time it is the highest reading for almost three years – from December, 2009.
The Bank of England representative David Miles making speech on Tuesday said that recent positive signals in the British economy don’t indicate a possible early key interest rate increase. Besides, investors are too optimistic about the fact how quickly unemployment rate would fall.
Canadian dollar had almost no reaction to retail sales data and by the end of the day it slightly fell. Retail sales rose in July by 0.6% in comparison with the prior month, which met the expectations. Core Retail Sales rose by 1% having exceeded the expectations (+0.6%) but prior month data were revised downwards.
By MasterForex Company
Overview of the main economical events of the current day - 26/09/2013
The USA will Reach National Debt Upper Limit Before October, 17
The US dollar dropped on Wednesday Vs most major currencies after four days of correctional growth amid the concerns of raising US national debt ceiling. The euro and the pound rose after the publication of positive statistics on German Consumer Confidence growth and UK Retail Sales. New Zealand and Australian dollar looked worse amid New Zealand trade balance deficit growth to many years’ heights.
As U.S. Secretary of the Treasury Jacob Lew said in the letter to the Speaker of the House of Representatives John Boehner - by October, 17 the U.S. Department of the Treasury would have exhausted the possibilities which allowed the country to avoid debt growth higher than the prohibited level. It was the first time when a deadline was marked by which the politicians will have to come to agreement about raising debt upper limit from the current reading $16.7 trillion.
US statistics released on Wednesday generally met the forecasts and didn’t have any significant impact on trading. Durable Goods Orders showed a weak growth in August as demand for aircraft and military equipment has declined. The orders grew in August by 0.1% while no changes were expected but prior month indicator was revised for the worse. Durable Goods Orders Ex Transportation fell by 0.1% against the forecasted growth by 1%. US New Home Sales rose by 7.9% in August to 421 thousand homes while a growth to 420 thousand was forecasted.
The euro rose after the publication of German Consumer Sentiment. GfK German Consumer Climate rose to 7.1 p. in October having exceeded the forecast of 7.0 p. September index was also revised upwards by 0.1 p. to 0.7 p. The reading in October became the highest one since September, 2007. Italian Consumer Confidence Index grew to 101.1 p. in September – the highest level since June, 2011 against 98.4 p. in August. At the same time Business Confidence Indicator of France dropped in September after four months of growth to 97 p. from 98 p. prior month.
The pound reached 4-day high against the dollar after the release of CBI Realized Sales. CBI Realized Sales reached +34 in September, the highest reading since June, 2012 against +27 in August while it was expected to fall. Consumer Confidence continues to strengthen in the country. The Bank of England announced on Wednesday that housing market recovery was gathering pace and its Financial Policy Committee was ready to act in case of risks for stability.
New Zealand fell to the lowest level for a week against the US dollar after the release of a weak trade balance report although then partially recovered its losses. New Zealand trade balance deficit was 1.19 billion New Zealand dollars in August having considerably exceeded the deficit expectations of 0.70 billion. The data turned out the worst for the past 5 years. The exports dropped by 13.5% in comparison with the prior month and reached the lowest level within the year.
By MasterForex Company
Overview of the main economical events of the current day - 27/09/2013
UK GDP Growth in the Second Quarter Disappointed Investors
The US dollar was traded upwards to most major currencies amid American labour market strong data, annual rates decrease of the UK economic growth, weak euro-zone data and political instability in Italy.
US Unemployment Claims are still near 6-year low – and decreased by 5 thousand last week to 305 thousand while a growth to 325 thousand was forecasted. Initial Jobless Claims - 4 Week Average continues falling and dropped by 7 thousand more last week to 308 thousand. These data are especially important before Non-Farm Payrolls which will be released next week.
The Final Estimate of the US GDP growth for the second quarter was kept unchanged at 2.5% at an annual rate – which turned out slightly less than forecasted 2.6%-2.7%. Consumer spending growth was also unchanged – 1.8% Vs the forecast up to 1.9%. The exports and private investment were revised for the worse. However, American economic growth accelerated in the second quarter in comparison with 1.8%-growth by the end of the first quarter.
The dollar partially lost its positions after the release of housing market data. According to the National Association of Realtors (NAR) - Pending Home Sales Index, a leading index of real estate market, fell by 1.6% m/m in August to 107.7, which turned out a little more than expected decrease by 1%. Pending Home Sales have been falling for three months in a row.
The pound dropped after the release of UK Final GDP for the second quarter which turned out weaker than preliminary estimates. Country’s GDP growth estimate in the second quarter was kept unchanged at 0.7% in comparison with the prior quarter. But at an annual rate the reading was lowered to 1.3% from earlier announced level 1.5%, no changes were expected then. Revised Business Investment fell by 2.7% q/q Vs preliminary estimated growth by 0.9%. Current Account deficit for the second quarter also turned out worse than forecasted.
The euro was traded downwards amid euro-zone record loan decrease rates which have been falling for 16 months in a row. Private Loans dropped by 2% in August in the euro-zone in comparison with the same period last year. It is the lowest decrease in Private Loans from the moment of euro zone creation in 1999. During this year there were record loan decrease rates. According to new data the process is accelerating. Retail Sales fell by 0.3% in Italy while a drop only by 0.1% was expected.
The yen fell on Thursday after four days of strengthening on the back of Japanese stock market growth which maintained on speculation in corporation tax decrease and pension reform in Japan. Corporation tax decrease must smooth a negative economic effect from sales tax increase. Government Pension Funds can raise risky assets in their portfolios. Prime Minister of Japan is expected to announce an economic stimulus package on October 1 along with the decision on sales tax increase.
By MasterForex Company
Overview of the main economical events of the current day - 30/09/2013
The Main Events of the Week
The US dollar was traded downwards on Friday against most major currencies (except commodity ones) amid US Consumer confidence decrease and uncertainty about the budget and national debt ceiling. U. of Michigan Consumer Sentiment dropped in September to the lowest reading for five months 77.5 p. from 82.1 p. prior month. The data turned out worse than forecasted decrease to 78 p.
Negotiations on the budget and US national debt are still an important factor for all financial markets. Their failure can lead to the suspension of the government’s work which in case of duration for 3-4 weeks will decrease US GDP in the fourth quarter by 1.4% according to the forecast of Moody’s. The dollar was also negatively affected by the words of FOMC member Charles Evans who said that he wouldn’t be surprised if bond purchase reduction wasn’t started even in October. FOMC member William Dudley also said that the economy wasn’t strong enough yet to start tapering off QE.
The euro reached 8-day high on Friday Vs the dollar amid euro-zone economic sentiment growth. Euro-Zone Economic Confidence from the European Commission exceeded the forecast (96 p.) and grew in September to the highest reading since August, 2011 amounting to 96.9 p. against 95.3 p. prior month. The pound also rose after the Bank of England governor Mark Carney had said on Friday that he saw no reasons for further quantitative easing.
By the end of the week the dollar lost 0.24% according to the dollar index having closed the third week by decline. The dollar fell against the Japanese yen (-1.04%), British pound (-0.86%) and Swiss franc (-0.47%); it almost didn’t change Vs the euro and Canadian dollar; it rose Vs New Zealand dollar (+0.98%) and Australian dollar (+0.82%). According to the end of September, till the end of which only one day is left, the dollar significantly weakened having lost almost 1.9% according to the dollar index. Monthly decrease risks becoming the lowest for almost two years.
The first week of the month as always will be saturated with important events. There will be three central banks meetings, PMI, retail sales, inflation and labour market data. In euro-zone there will be a release of preliminary inflation data on Monday, on Thursday – manufacturing PMI and unemployment data, on Wednesday – ECB decision on rate and Mario Draghi’s press conference (the meeting is moved for one day due to the holiday on Thursday in Germany) and on Thursday – Service PMI and retail sales. In Germany retail sales data will be published on Monday, on Tuesday – labour market and on Friday – Producer Price Index.
In the UK Mortgage Approvals will be released on Monday and Manufacturing, Construction and Service PMI will be published from Tuesday to Thursday. A further index growth is expected except the service sector where the index is unchanged. In Japan industrial output and retail sales will be released on Monday, on Tuesday – Tankan quarterly report and on Friday the results of the Bank of Japan meeting will be announced.
In Australia retail sales will be released on Tuesday and RBA will announce the results of its meeting on rates, no changes are expected. JPMorgan forecasts another rate decrease in November and it can be insinuated already at this meeting. The markets consider 50%- probability of the rate decrease by 0.25% by the end of this year. On Wednesday Australian trade balance and building permits will be published on Wednesday. In China official Manufacturing PMI will be released on Tuesday and Service PMI – on Thursday. In Canada GDP will be released on Monday and Ivey PMI – on Friday.
In the USA Chicago PMI will be released on Monday, on Tuesday – ISM Manufacturing PMI and Construction Spending; on Wednesday - ADP Employment Change; on Thursday – ISM Service PMI and Factory Orders. Fed governor Bernanke will make a speech at St. Louis Fed conference on Wednesday. And finally, the week and probably the month will be finished on Friday by a key report of the whole week - Non-Farm Payrolls. About 180 thousand of new jobs are expected against 169 thousand prior month - and a constant unemployment rate 7.3%.
By MasterForex Company
Overview of the main economical events of the current day - 01/10/2013
The US Government Can Shut Down for the First Time in 17 Years
On Monday the markets were not dominated by macroeconomic indicators but by a political crisis in Italy and a fiscal crisis in the USA. The US dollar had fallen a little to most major currencies by the end of the day amid aroused concerns that a failure of negotiations on the US budget for a new financial year could weaken economic growth of the country.
According to the evening of September, 30 two houses of the US Congress didn’t manage to bring their positions on budget issues closer, which may threaten the US government with the first shutdown in 17 years. This factor is putting pressure on the dollar and this issue is still dominating macroeconomic releases. Chicago PMI turned out better than expected (54 p.) and rose to 55.7 p. in September in comparison with 53 p. in August.
The euro opened with a fall amid aggravated political crisis in Italy. The leader of the Conservative Party Berlusconi withdrew his support from the government coalition last Saturday. Italian Prime Minister said that he would demand a vote of confidence on Wednesday to prevent government shutdown. The Fitch published statements about the situation in Italy warning that if Enrico Letta’s government didn’t get a vote of confidence on Wednesday, financial goals of the country may get in jeopardy.
The euro leveled all its losses after the news that some members of Berlusconi’s party may quit the party and support the Prime Minister in order to prevent the collapse of the Italian government. Euro-zone inflation dropped to the lowest reading in September for 3.5 years – 1.1% at an annual rate, which is significantly lower than the target ECB level. Inflation will not make any obstacles for further economic stimulation if the ECB decides it is necessary to support economy.
The pound updated a monthly height on Monday and reached almost 9-month high Vs the dollar amid positive housing market data. The pound showed the highest growth for September in per cent for more than three years. According to the Bank of England Mortgage Approvals rose to 62.2 thousand in August against 60.9 thousand prior month, which became the highest reading since March, 2008. Hometrack House Prices rose by 0.5% in September, which became the highest monthly growth since May, 2007.
The Australian dollar had almost no reaction on HSBC Final Manufacturing PMI decline for September, which was revised to 50.2 from preliminary reading of 51.2 – however, the result turned out slightly better than the reading in August 50.1. New Zealand dollar was traded upwards amid Business Confidence growth in the country to the highest readings for more than 14 years. ANZ Business Confidence rose to 54.1 in September against 48.1 in August – which has become the highest reading since March, 1999.
Canadian dollar also had almost no reaction to July economic growth data which turned out better than forecasted. Canadian GDP rose by 0.6% in July against the expected growth by 0.5% having shown the highest increase rates for 2 years. The yen reached a monthly height against the dollar but then lost all its growth on the back of correctional bounce of stock markets in the second half of the day.
By MasterForex Company
Overview of the main economical events of the current day - 02/10/2013
Fed QE Tapering Off May Be Not in October
The US dollar fell in the first half of Tuesday after the news about partial shutdown of the US government due to the disagreements over the budget bill in the Congress. But then the dollar partially recovered its losses amid the release of US Manufacturing PMI which grew despite the forecasts.
The markets seem to believe that government shutdown is unlikely to last long and economic damage may be limited (0.1%-0.2% from GDP per week). A larger concern is aroused by the problem of the US national debt ceiling increase which must be solved till October, 17.
The budget for a new financial year which comes October, 1 in the USA hasn’t been approved yet. The democrats and republicans in the Congress didn’t manage to agree even on a stopgap budget. For the first time in 17 years the USA is left without budget and the work of some federal institutions is suspended, so called ShutDown.
Publication of almost all indicators of statistics, which are released by governmental state institutions, may be delayed including Non-Farm Payrolls on Friday. All this can lead to the fact that the decision on QE3 tapering off may be not taken even at October meeting.
ISM Manufacturing PMI rose to 56.2 p. from 55.7 p. prior month while a drop to 55 p. was expected. The index has been growing for four months in a row. Inventories, production, employment and prices also have risen while new orders have decreased.
The euro reached the highest level since February, 6 Vs the dollar but then lost all its growth. Some pressure was put by German Employment report which showed unemployment growth in September by 0.1% to 6.9% while no changes were expected. German Unemployment Change rose by 25 thousand in September against expected decrease by 5 thousand. Euro-zone final Manufacturing PMI coincided with the preliminary estimate 51.1 p. against 51.4 p. in August (26-month height). However, the data of certain countries (Germany, Italy, and Spain) turned out worse than expected.
The pound reached its high since the beginning of the year but then also fell. UK Manufacturing PMI fell unexpectedly after 6-month growth while its continuation was forecasted. PMI dropped in September to 56.7 p. from 57.1 p. prior month (the highest reading for 2.5 years).
Australian dollar rose to 8-day high after the Reserve Bank of Australia had kept the key interest rate unchanged and published generally neutral statement according to which further rate decrease was unlikely. Other data were also positive. Retail sales in August rose more than expected - by 0.4% against the forecast +0.3%. HIA New Home Sales rose by 3.4% in August Vs prior month.
The yen was traded upwards after the Prime Minister of Japan Shinzo Abe had announced on Tuesday sales tax increase up to 8% from 5%, which will be followed by a stimulus package of 5 trillion yen to prevent economic slowdown because of a negative impact of tax increase. Tankan Large Manufacturers Index rose to its high for almost six years in the third quarter: 12 p. from 4 p. in June with the forecasted growth up to 7 p.
By MasterForex Company
Overview of the main economical events of the current day - 03/10/2013
Euro Reached 8-Month High Vs Dollar
The US dollar fell significantly on Wednesday and showed the lowest decrease for two weeks amid weak labour market data, continuation of the US government shutdown and unsolved budget issues and national debt limit increase. The euro rocketed on the back of the ECB governor Mario Draghi’s press conference and political tensions decline in Italy after Italian government got a confidence vote in the upper house of the parliament.
The White House and congressmen prepare for a long battle over the budget and continue exchanging accusations due to the shutdown of federal institutions without having started real negotiations on a compromise over the budget. According to The Wall Street Journal, the fact that lawmakers and the White House show no rapprochement increases the probability that the present crisis can turn into a more profound confrontation around the US national debt limit increase.
Due to the shutdown of statistical offices the only source of macroeconomic data in the USA became nongovernmental agencies. On Wednesday ADP data were released which showed a considerably smaller growth of employment change than expected, - which reduces the probability of QE3 tapering. FOMC Member Eric Rosengren also said on Wednesday that stimulus measures shouldn’t be tapered off prematurely.
ADP Employment Change rose to 166 thousand in September with the forecasted growth to 180 thousand. Prior month data were significantly revised downwards from 176 thousand to 159 thousand. ADP Non-Farm Payrolls on Wednesday, which is often considered a leading indicator of the official report, drew a greater attention of the market because of the fact that on Friday the official report of the Labor Department probably will not be published.
The ECB left the key interest rate on Wednesday unchanged at 0.5% per annum as it was expected. The euro had rocketed and reached 8-month high Vs the US dollar after the press conference of the ECB president Mario Draghi – investors regarded his comments as a sign that the central bank wouldn’t perform extra stimulation of the region’s economy which could put pressure on the euro. Draghi answered the question whether the euro rate was too high that the exchange rate was not a policy tool. The government of Italian Prime Minister Enrico Letta got a vote of confidence on Wednesday in the upper house of the parliament after the former Prime Minister Berlusconi decided to support the ruling coalition.
The pound was traded upwards despite a slight decrease of Construction PMI in the UK. Construction PMI dropped to 58.9 p. in September from the record reading for 6 years 59.1 p. seen in August against expected growth to 59.5 p. Meanwhile, Residential Construction reached the highest level since November, 2003 – 64.8 p. MPC Member Paul Fisher said on Wednesday that providing monetary policy Forward Guidance favored UK economic recovery.
New Zealand dollar rose after a tough statement of the Reserve Bank of New Zealand Governor Wheeler who said that in order to restrain inflation pressure and housing price increase – official interest rate could rise by 2% during 2014 – 2016. Interest rate can be raised even more significantly if the rules of mortgage lending don’t slow down housing prices.
Australian dollar was traded downwards on Wednesday amid weak macrostatistics data. Building Approvals in Australia fell by 4.7% m/m in August, which turned out considerably higher than forecasted decrease by 0.5%. Australian Trade Deficit in August fell less than expected to 0.815 billion AUD while its decrease to 0.4 billion AUD was expected.
By MasterForex Company
Overview of the main economical events of the current day - 04/10/2013
Shutdown Can Lead the USA to Default
The US dollar continued falling on Thursday against most major currencies for the fifth session in a row amid contradictory statistics and the US government shutdown. The dollar dropped against the euro, franc and yen and grew against the pound – having fallen a little according to the dollar index. Unemployment Claims turned out better than expected but the US Service PMI fell significantly. The euro rose on the back of strong retail sales data and euro-zone Service PMI growth. The pound decreased after a slight drop of the UK Service PMI.
There is no progress yet in budget and US national debt issues, government shutdown has been going on for three days in a row. The USA president Barack Obama said that the Shutdown could lead the country to default. Last week Treasury Department also said that the Congress could lead the country to default if it didn’t raise the debt limit till October 17.
According to the Bloomberg, next week republicans intend to offer the US president Obama to raise the USA national debt limit in exchange for accepting their suggestions on changing expenditure budget in particular healthcare program financing. Meanwhile, a famous business magnate and investor Warren Buffett believes that the US Congress will solve the question of debt ceiling increase before this problem starts hurting American economy seriously.
The US Unemployment Claims last week rose only by 1 thousand to 308 thousand although a growth by 8 thousand was expected. The claims rate is still about 6-year low. Initial Jobless Claims - 4 Week Average which smoothes the volatility of weekly data dropped by 3.75 thousand last week to 305.5 thousand – the lowest reading since May 2007. The data become more important because Non-Farm Payrolls is unlikely to be published on Friday.
The dollar fell on Thursday after ISM data release according to which Non-Manufacturing PMI dropped considerably in September to the lowest reading in three months 54.4 p. from the historical height of 58.6 p. in August. A decrease only to 57 p. was expected. Employment and PMI decreased most of all. FOMC member Williams making speech on Thursday said that mild monetary policy would be required for a rather long period of time. FOMC Member Dennis Lockhart also said that a long government shutdown made QE tapering in October less possible.
The euro continued rising amid rather strong data that prove EU economic recovery. Euro-zone retail sales rose by 0.7% m/m in August against the expected increase by 0.2%. Prior month data were also revised upwards from 0.1% to 0.5%. Euro-zone Final Service PMI rose a little more than expected – to 52.2 p. against the preliminary estimate of 52.1 p. In France and Italy the index turned out better than expected while it was worse in Germany and Spain.
The pound was traded downwards on the back of a slight decrease of Service PMI from almost 7-year high reached a month ago. The UK Service PMI fell to 60.3 p. in September against 60.5 p. in August while no changes were expected. But all three September indexes released this week – Manufacturing, Construction and Services – turned out worse than expected. Halifax House Price Index turned out a little worse than forecasted – it rose by 0.3% m/m in September while a growth by 0.5% was forecasted.
By MasterForex Company
Overview of the main economical events of the current day - 07/10/2013
The Main Events of the Week
The US dollar rose on Friday against most major currencies after five days of decline and recovered almost all its weekly losses according to the dollar index – amid the expectations that American authorities will manage to solve the US budget problems in the nearest days. Non-Farm Payrolls report wasn’t released on Friday and its publication is postponed indefinitely.
According to the results of the week the dollar lost 0.15% to the dollar index falling for four weeks in a row. The dollar dropped against the Australian dollar (-1.29%), Japanese yen (0.73%), New Zealand dollar (0.57%), euro (-0.25%) and Canadian dollar (-0.12%) – but it rose against the British pound (+0.76%) and Swiss franc (+0.15%). The dollar got under pressure last week amid aggravated budget and debt crisis in the USA, government shutdown and difficulties in negotiations between republicans and democrats in the Congress on budget issues and coming national debt ceiling increase term.
Despite the fact that no compromise between the White House and the Congress is reached, the first encouraging signs of confrontation overcome appeared on Friday – the representatives of the Republican Party in the US Congress started to soften their position towards ObamaCare and now they are more inclined to a more comprehensive agreement on budget which would include debt ceiling increase.
According to the Goldman Sachs a compromise on both key issues: budget and debt – will be not made before the end of this week and both problems will be solved with a single package deal. The most possible term is close to October 17. In the past the shutdown of the US public institutions financing happened 17 times for the last 40 years and continued from one day to three weeks. The last crisis was in late 1995 – early 1996 and was record long -21 days.
This week the markets will wait for the US fiscal budget settlement and a lot of US statistics published by state institutions are unlikely to be released. These are Trade Balance (Tuesday), Wholesale Inventories (Wednesday), Import Prices (Thursday); Retail Sales and Producer Price Index (Friday). Only nongovernmental agencies and also Federal Reserve data will be released. The main event will be the publication of FOMC Meeting Minutes on Wednesday. On Tuesday NFIB Small Business Optimism and IBD/TIPP Economic Optimism will be released; and on Friday - Preliminary U. of Michigan Consumer Sentiment. Tuesday, October 8 is the start of American companies Earnings Season for the third quarter which will last till the middle of November.
In the euro-zone the Final GDP for the second quarter and Sentix Investor Confidence will be released on Monday and ECB Monthly Bulletin- on Thursday. In Germany Trade Balance and Factory Orders will be released on Tuesday and on Wednesday – Industrial Output. Also Industrial Output will be released in France and Italy on Thursday. Industrial Output and Factory Orders growth is expected in Germany in August in comparison with weak July data.
The Bank of England publishes the results of its monthly meeting on Thursday; no changes in the policy are expected. Industrial output and trade balance of the UK will be released on Wednesday. In Japan Trade Balance and Current Account will be released on Tuesday, on Wednesday – BoJ Meeting Minutes from September 4-5 and on Thursday - Core Machinery Orders. Chinese Trade Balance will be released on Saturday.
In Australia labour force data are due on Thursday, on Tuesday - NAB Business Confidence, on Wednesday - Westpac Consumer Sentiment. In New Zealand NZIER Business Confidence will be released on Tuesday and on Thursday - Business NZ Manufacturing Index. In Canada Building Permits will be released on Monday, on Tuesday – Trade Balance, on Thursday – New Housing Price Index and on Friday – labour market report.
By MasterForex Company