Bad Data Becoming The Norm

26-08-2010

USD

Additional poor data was reported from the U.S. on Wednesday as the New Home Sales completely missed its estimate. The outcome of 276k was far short of the 333k expectation. And troubling to investors was that the previous month’s total was revised downwards too, following in the footsteps of the Existing Home Sales data reported a day earlier. Topping off this wreckage were ugly Core Durable Goods Orders which came in with a number of minus -3.8% compared to the forecast of plus 0.6%. The USD traded in a stable range most of the day, but interestingly enough did give back a small amount of ground to the EUR and GBP. Wall Street started the day off weakly, but also managed to surprisingly finish the day with slightly positive gains. Today the weekly Unemployment Claims will be released and the result is supposed to be a bit better than last week’s number.

There has been very little in the way of positive economic data from the U.S. this week. However, the USD has managed to turn in gains as a whole and this can be interpreted as a safe haven play. Investors continue to stay away from the equity markets and volumes are still low even taking into context that we are finishing the dog days of summer. Essentially there is one week of summer trading left before the Labor Day weekend arises a little more than a week from now. Tomorrow the Revised GDP will be published from the U.S. and traders who have had their sentiment jarred by lackluster data will be weary of what could develop. Wall Street has been negative for two and a half weeks and in order to create a change of fundamental beliefs may prove tough before going into the weekend. The USD may continue to test ranges today as ‘fair value’ is pricked at by traders.

EUR

The German Ifo Business Climate reading provided some positive news for the E.U. on Wednesday with a mark of 106.7, which beat the estimate of 105.8. The EUR did trade in a stable range and managed to pick up some of its lost ground. Today Germany will once again be in focus with the GfK Consumer Climate index which is forecasted to have a reading of 4.1. Tomorrow will be relatively light with data with only CPI numbers being brought forth. While Germany proves to be the ‘engine that could’ other nations in the E.U. continue to be a worry. Questions have been hovering over Ireland, Greece, and Hungary much of this week due to various concerns. Essentially it is being pointed out that the prospects for overall growth from the E.U. remain troubling and that Germany and a few others will not be able to be the ‘sugar daddy’s’ of the continent forever. However, Europe is not alone with its problems and questions about its debt ratios. The EUR has traded weaker, but could find some backing short term if its decline has been judged to have been too quick.

GBP

No major economic data came from the U.K on Wednesday and today only the CBI Realized Sales will be brought forth. Today’s release has an estimate of 23, which is below the previous result of 33. The Sterling did gain yesterday as traders showed some risk appetite. Tomorrow the Revised GDP numbers are on schedule and this will likely prove to be an important judgment for the GBP. Prospects for economic growth have been argued far and wide regarding the U.K. and investors monitor the report’s results carefully and weigh them against the austerity measures that are being implemented by the government. The Sterling may have a dollar centric day of trading, but certainly traders will begin to position themselves for tomorrow’s important round of homegrown data.

JPY & AUD

The JPY and AUD both traded in fairly tight ranges on Wednesday. Asian bourses continued to turn in mixed results as fallout from the strong JPY continues to create havoc with Japanese equities, but in turn helps some of its competitors such as the Korean auto manufacturers. The AUD is still under the shadow of the uncertainly that is emanating due to the unknown leadership of the Australia government. Gold has been strong the past few days and as of this morning is around 1240.00 USD per ounce. Gold has certainly found additional support due to the international concerns regarding another economic downturn.

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