Key US employment data to be released today
A strong start to the week for the US dollar as better than expected Pending Home Sales data increased speculation that the Federal Reserve would taper bond-buying this Autumn. Whilst the figures did reveal a decline, the decline was not as big as expected after reaching the highest level in over six years in June. On Wednesday, despite better-than-forecast GDP data, the US dollar experienced high levels of volatility across the board and movements in both directions as traders held their collective breath ahead of the evening’s statement from the Federal Open Market Committee. Traders had been speculating the statement might reveal further clarity regarding the so called tapering of the Federal Bank’s bond buying program. However, no such details were given and the committee stated that it was “prepared to increase or decrease” its bond buying program where necessary, whilst stating that deflation could hard harm the US economy. Gains were seen yesterday in response to more convincing economic data. Both unemployment and manufacturing data from the US were better than expected which fuelled speculation once again that the central bank could taper its monthly asset purchases at some point this year. Looking ahead to today, we have the highly influential non-farm payrolls data released. Given the rhetoric from the Federal Bank that tapering would only be considered when the labour market has shown significant improvements, this release is likely to cause volatility in the market. Additionally, a member of the Federal Open Market Committee is speaking in the afternoon and will comment on future policy deliberations. Call your trader now to see how the latest data is received.
Will they/won’t they “taper” US quantitative easing soon | 31/07/2013
The US dollar remained flimsy yesterday ahead of a very data-heavy few days for the world’s largest economy. The dollar did strengthen against a weak sterling and spiked briefly against the euro before quickly relinquishing the ground it had made. Following the previously cautious approach from the Chairman of the Federal Bank with regards to the tapering back of the US bond-buying programme, investors appear reluctant to back the dollar before this evening’s Federal Open Market Committee statement. Should the Chairman’s comments suggest that a tapering back in the near future is likely then expect to see the dollar strengthen significantly, however it may continue to struggle if we see further hesitancy and commitment to an accommodative monetary policy. Tomorrow also sees the release of employment data alongside quarterly Advance GDP data during the afternoon. Changes in monetary policy will only be affected in response to an improvement in economic conditions and the second quarter GDP figures are sure to play a key part in this. Call your trader now to see if the Federal Reserve can spark a change in US dollar fortunes.
Another tough week for US Dollar | 26/07/2013
As expected, the US dollar sensitivity to economic data has been magnified recently following comments from the Chairman of the Federal Bank expressed his commitment to an accommodative monetary policy and this has caused it to be another tough week for the dollar. Early weakness was experienced in response to worse than expected existing home sales data, causing the dollar to slide against the majority of its major peers and notably to trade at one month lows against sterling. Some positive figures were seen mid-week, with increases seen in new home sales and better than expected growth in the manufacturing sector, prompted a slightly better performance. A survey of leading economists released this week revealed that that around 50% of those surveyed believe that the Federal Open Market Committee (FOMC) would reduce the pace of bond-buying by $20 billion per month in September. Such a result would boost dollar performance in the medium term and as a result this survey had a positive effect, but a reduction is by no means assured at this stage and speculation will continue as further economic data comes through. Finally, yesterday’s Unemployment Claims data and Core Durable Goods Orders figures both fell short of expectations and failed to give the dollar a boost. Whilst medium term forecasts are still geared towards a US dollar recovery, we will need to see some improved data coming through before progress is made in the short term. The only real data of note coming in before the weekend is revised consumer sentiment data being released this afternoon by the University of Michigan. Call in now to see how the US dollar reacts to the latest data releases.