Fundamental News
Today’s highlights:
• Core CPI (MoM) (Can; 13:30 GMT)
• FOMC Member Bullard Speaks (U.S; 17:55 GMT)
Sales of previously owned U.S. homes unexpectedly rose in August to the highest level in more than six years as buyers rushed to lock in interest rates before they increased further. Purchases climbed 1.7 percent to a 5.48 million annual rate, the most since February 2007, figures from the National Association of Realtors showed yesterday in Washington. Moreover, manufacturing activity in the mid-Atlantic region picked up in September, according to a report released by the Federal Reserve Bank of Philadelphia, with the index of regional manufacturing activity jumping to its highest level in over two years. The Philly Fed said its diffusion index of current activity surged up to 22.3 in September from 9.3 in August, with a positive reading indicating an increase in Philadelphia-area manufacturing activity. The Conference Board also released a report on Thursday showing that its index of leading U.S. economic indicators rose by slightly more than expected in the month of August. The Conference Board said its leading economic index rose by 0.7 percent in August following a revised 0.5 percent increase in July and no change in June. On the other hand, the Labor Department released a report showing that claims rebounded by much less than expected in the week ended September 14th. The report said initial jobless claims rose to 309,000, an increase of 15,000 from the previous week’s revised figure of 294,000. Economists had been expecting claims to jump to 341,000.
International Monetary Fund Chief Christine Lagarde said global economic growth remains subdued despite signs of recovery taking hold in the U.S., emphasizing the point that economies are moving at different speeds. The stake of U.S. in the global recovery is greater than ever in a world of increasing economic interconnections, Lagarde said in a speech to business leaders at the U.S. Chamber of Commerce in Washington, D.C on Thursday. Ahead of the release of the next World Economic Outlook on October 8, she underscored the interplay between the global economy and the U.S. economy and the importance of job creation.
U.K. retail sales declined for the first time in four months in August, reflecting weak demand for food, official data showed Thursday. Retail sales volume, including automotive fuel, dropped unexpectedly by 0.9 percent month-on-month in August due to a fall in food sales, a report released by the Office for National Statistics revealed. In July, sales benefited substantially from hot weather. Retail sales fell for the first time in four months and by the most since last October in August. Economists had expected sales to have risen by 0.4 percent after the 1.1 percent increase in July.
EUR/USD: The EUR/USD fluctuated within 70pips yesterday as some mixed economic data were released in the U.S. Sales of previously owned U.S. homes unexpectedly rose in August to the highest level in more than six years as buyers rushed to lock in interest rates before they increased further, while the Labor Department showed jobless claims rose less than forecast last week as two states began working through a backlog of applications that were caused by computer-system changeovers. Today, the pair was trading flat at 1.35318 at the time of writing before data forecast to show consumer confidence was the strongest in more than two years in the 17-nation currency bloc and manufacturing expanded for a third month. An index of household confidence in the countries that share the euro probably rose to minus 14.5 in September, the highest level since July 2011, from minus 15.6 in the previous month, according to the median estimate of economists surveyed by Bloomberg News. A separate poll predict London-based Markit Economics will say on Sept. 23 its gauge of manufacturing activity based on a survey of purchasing managers in the currency bloc increased to 51.6 this month, the most since June 2011, from 51.4 in August. Later in the day in the American trading session; the FOMC Member Bullard will make a speech. FOMC members are responsible for setting the benchmark interest rate and their speeches are closely watched for indications on the future possible direction of monetary policy. His comments may determine a short-term positive or negative trend. Investors should remain cautious on the pair and for more visibility on the direction of the pair; they need to monitor the latest developments in Syria. The resistance level is at 1.35654 and the support level is at 1.34993.
USD/CAD: Canada’s dollar fell from a three-month high as traders bet the currency had moved too far, too fast after slower U.S. growth prompted the Federal Reserve to unexpectedly maintain monetary stimulus Wednesday. U.S. government debt rallied yesterday as the Fed maintained its $85 billion in monthly asset purchases, sending borrowing costs down and widening the interest-rate gap between Canadian and U.S. two-year government debt to the most since January. Today, the pair was trading higher at 1.02781 at the time of writing but investors should remain very cautious as Canada will release the key risk event; the Core CPI (MoM). The Core Consumer Price Index (CPI), which measures the changes in the price of goods and services, excluding food and energy is expected to show a mild improvement to 0.1% from last month reading of 0.0%. If a higher than expected reading is released, it should be taken as bullish for the CAD, while a lower than expected reading should be taken as bearish for the CAD. Later in the day in the American trading session; the FOMC Member Bullard will make a speech. FOMC members are responsible for setting the benchmark interest rate and their speeches are closely watched for indications on the future possible direction of monetary policy. His comments may determine a short-term positive or negative trend. Investors should wait for the data in Canada to come on market before taking position on the pair. The resistance level is at 1.03186 and the support level is at 1.01986.
