Fx Highlight: Usd
There are a number of pivotal economic releases for the US dollar due to be released next week. Among the reports will be the Bureau of Economic Analysis’ first estimate for second-quarter GDP, the Conference Board’s consumer confidence index, and official government data for employment in July.
By Peter Martin
Friday, July 25, 2014 - 00:00
Judging by the dollar’s strength today, market participants are optimistic about the outcomes of these focal events. The dollar has advanced against all the major currencies in today’s trading, and by early afternoon in New York, USD/CHF was up 0.25% at 0.9048, EUR/USD was down 0.27% at 1.3428 and USD/CAD rose 0.66% to 1.0816.
The dollar began July close to its lowest point in two months, based on the level of the dollar index, a measure of the dollar’s value against a basket of six leading currencies. Contributing to the dollar’s weakness were comments made by Fed Chair Janet Yellen in her press conference following the last FOMC meeting, back in the middle of June, when she said ‘underutilization in the labor market remains significant’, described longer-term inflation expectations as appearing ‘well anchored’ and concluded that it was likely appropriate to maintain current low rates for a considerable time after stimulus is brought to an end.
Since then, the dollar has been on an upward march though, as economic indicators, particularly for the manufacturing sector, have repeatedly suggested the economy is on an upward curve. This has been perceived by the market as putting the Fed on a faster path to tighter policy in contrast to other central banks, perhaps with the exception of the Bank of England.
June’s data for durable goods orders, the day’s sole major domestic macro news, is another confirmation of the manufacturing sector’s recent strength. New orders climbed 0.7% in June, rebounding from a 1.0% drop in May and exceeding expectations, which had pointed to a 0.5% rise. Despite that May decline, durable goods orders have been encouraging this year: today’s report showed the fourth increase in five months, which is impressive for such a notoriously volatile indicator. We’ll have an even clearer picture of the manufacturing sector at the end of next week with the release of Markit’s manufacturing PMI and the ISM’s manufacturing index (both for July).
This information has been prepared by Nadex, a trading name of North American Derivatives Exchange, Inc., prepared by independent third parties contracted by Nadex or reproduced form third party news agencies. In addition to the disclaimer below, the material on this page does not contain an offer of, or solicitation for, a transaction in any financial instrument. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.