HEADLINES Will Another Drop In Consumer Confidence Threaten USD Support? Forex: Yen Bought On Syria-Linked Jitters, Euro May Rise On IFO Data
ASIA/EUROPE FOREX NEWS WRAP
TRADING TIPS SELL EURUSD BELOW
After a strong midweek performance, the US Dollar slumped on Friday and its woes have continued into the last week of August. Sparked by a slew of weak housing figures on Friday, the buck’s downturn has begun at a curious time for markets, given the fact that last week produced not only the July FOMC Minutes but also the Jackson Hole Economic Policy Symposium.
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Indeed, there is one main takeaway from the fireworks (or lack thereof) last week: between now and September 19, the next FOMC meeting, only US economic data will drive market sentiment. Dovish or hawkish, the commentary was more or less the same from Fed officials this past week: ‘September would be an appropriate time to taper if the economic data is strong.’
SELL USDJPY BELOW 97.60 TGT 97.30/97.00 SL 97.90
SELL GBPUSD BELOW 1.5500 TGT 1.5480/1.5450 SL 1.5530
The first such opportunity to see if US data is moving in the right direction is today in the form of the Durable Goods Orders report for July. Durable goods are products with lifespans of three years or longer (appliances, automobiles, etc), and therefore the report is viewed as a proxy to consumer confidence and credit.
In light of the recent upswing in financing costs, purchases that would be aided by lower rates have taken a hit in recent months (as seen on Friday, housing). We find that the July report should show no difference from the general trend. The weakness seen in the US Dollar to start the week reflects positioning for a weaker report; and a beat here would go a long way to ease sentiment and put favor back in the buck’s court.