The first day of the trading session closed with the dollar’s positive growth against the euro, but with significant loss against the yen. Economic data, released yesterday didn’t bring any changes to the market. Today, on the contrary, we expect some valuable data to show up – S&P/Case-Shiller home price index for June, released today is anticipated with a slowdown, because it only grew by 3.9% y/y in 20 megapolices, after it showed 4.6% y/y in May. Chicago PMI is likely to decrease by 57.6 after 62.3, but Conference Board data is expected with positive growth of consumer confidence in August – from 50.4 to 51.0. FOMC meeting minutes is going to be in the spotlight of today’s news. The documents are not likely to contain any new data, differing from the ones, provided by B.Bernanke in Jackson Hole. Nevertheless, the market will pay its close attention to this event. Difference of views among committee members is an interesting issue, which can cause some activity in the market.
EUR
The European currency had been experiencing pressures for almost the whole past week and, as a result, lost all of its profits. And though monthly report, released by the Euro commission contained mostly positive data, it still didn’t bring any support the European currency. Employment data is going to be of the most interest today. Unemployment level in Germany and in the Euro zone is expected to remain unchanged 7.6% and 10% respectively with a 20 thousand decrease in the largest European economy. Consumer Price Index is expected with some slowdown in August – from 1.7% y/y to 1.5% y/y. As for the nearest outlook, technical factors will probably restrict the euro’s fall. Strong supports at levels 1.2630/20 give a reason for profit fixation, and the release of Fed’s reports is also likely to cool the “bearish” eagerness to the euro.
GBP
The sterling fell against the dollar like the euro. At the very beginning of the trading on Monday, the currency was influenced by the negative data from Hometrack, which showed a decrease of British home prices in August. The index reached its 16-month low and registered -0.3% m/m, 1.5% y/y after 2.0% y/y in July. Besides, there were also comments, saying about the weakening demand against increasing home sales. Such state of things indicates poor outlook for this sector. There wasn’t any other information from Great Britain yesterday, because of the Summer Bank holiday. Today we expect crediting data from BoE. Mortgage lending is expected with 0.7 billion pounds growth, when the number of mortgage approvals decreased from 46.6 to 46.0.
Consumer credits aren’t likely to show any positive activity either. Such statistics won’t help the euro to stabilize the situation, so it’s probably a good idea to pay attention to the technical factors, which indicate a possible profit fixation in the GBP/USD pair.
JPY
The Japanese yen was in the spotlight on Monday. The Bank of Japan announced steps aimed at curbing the rising yen, but it didn’t meet the market’s expectations, so the yen quickly raised against all major currencies and closed the session with a large profit. Today is the last day of the month, so we expect a pack of significant economic news from Japan. Some of the data have already showed up – retail sales in July grew by 0.7% m/m and 3/9% y/y after 0.4% m/m and 3.3% y/y. Preliminary data on industrial manufacturing also showed growth by 0.3% m/m when -1.1% m/m was seen previously. PMI manufacturing in August slowed down from 52.8 to 50.1. As for the yen’s nearest outlook, it will be determined by the balance between risk appetite and fears of possible BoJ interventions. Taking into account lack of desired effect from monetary easing measures, the market assumes, and it’s quite reasonable, that currency intervention is the next to come. At the same time, positive results will only show if the intervention will be held in cooperation with other central banks, which is low-probability. So, the Japanese currency is more likely to proceed with its growth.
Dear colleagues, analytics won’t be released in the next few days due to my vacation.
Successful trading to all of you!
Analysis prepared by:
Arkady Nagiev
Forex4you analyst
