Market News : Daily Commentary(31 July 2010)
Daily Commentary
This morning the U.S dollar continues to trade on the back foot versus the majors on concerns that, second estimate, Q2 GDP data due for release shortly would add to signs of fading momentum for the U.S economic recovery. Market expectations are for a modest downward revision to 2.6% q/q from the previous reading at 2.7%. Today also see’s the release of the July reading of the Chicago PMI, with the market expecting moderation to 56.0 from 59.1. However, the release of a paper from St. Louis Fed President James Bullard yesterday titled, ‘Seven Faces of the Peril’ which discusses the possibility that the U.S economy may be transitioning slowly to a Japanese style deflationary outcome has attributed to dollar weakness this morning. The paper also included ‘the Fed would need to act if the economy worsened significantly’.
Data released overnight from the UK, pushed the pound to ease off its recent five month high versus the U.S dollar. Overnight GfK Consumer Confidence fell by more than expected to -22, markets had expected a level of -20. This morning’s data follows yesterday's release that house prices fell by more than expected in July, coming in at -0.5% m/m lower than the expected -0.3%. Concerns about the medium-term impact of fiscal austerity measures on personal finances is outweighing any potential optimism about the recent recovery's momentum, keeping demand for houses low. The pound did receive a short bounce this morning following the release of news that billionaire Li Ka-shing has offered to buy UK power grids from France’s EDF for £5.8bn ($9.1bn). This news had prompted the pound to push through major levels with moves exacerbated by lack of liquidity, the spike eased as traders move into month end positions.
Canadian producer and raw materials prices both fell unexpectedly in June from the previous month triggered by declines in commodity prices. Statistics Canada released the data late yesterday to show lower prices for petroleum and coal products. Canada’s producer price index moved down by 0.9% in June from May after two consecutive months of increases. The raw materials price index edged down 0.3% in June following a 7.3% drop in May. This morning the commodity downward trend has continued as Oil futures for September delivery slipped to $77.42 brl. The Canadian dollar continues to trade in its recent range with the U.S dollar following the fluctuations of commodity prices.
Have a great weekend.
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Economic Calendar
| Economic Calendar | Forecast | Actual |
|
Mon: US New Home Sales (June)
|
310k
|
330k
|
|
Tues: US Consumer Confidence (July)
|
51.0
|
50.4
|
|
Tues: German Gfk Consumer Confidence
|
3.5%
|
3.9%
|
|
Wed: US Durable Goods orders (June)
|
1.0%
|
-1.0%
|
|
Thurs: German Unemployment
|
7.6%
|
7.6%
|
|
Fri: US GDP
|
2.7%
|
08.30am
|
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