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The Greenback made a bit of a rebound from its post-FOMC slump as a couple of stronger than expected U.S. reports were printed.

  • U.S. core durable goods orders up 0.2% vs. projected 0.4% uptick
  • U.S. headline durable goods orders up 6.5% vs. 3.5% consensus
  • U.S. goods trade deficit narrowed from $66.3B to $63.9B
  • U.S. preliminary wholesale inventories up by 0.6% vs. 0.3% forecast
  • U.S. initial jobless claims at 244K vs. 240K forecast, 234K previous

Major Events/Reports

Upbeat U.S. medium-tier data

Uncle Sam’s latest batch of reports turned out mostly better than expected, keeping dollar bulls hopeful that the upcoming GDP release could revive hawkish FOMC expectations at some point.

The goods trade balance, which acts as a preview of the actual trade balance as it accounts for 75% of overall activity, showed a narrower deficit of $63.9 billion from the earlier $66.3 billion shortfall. This was also smaller than the projected $65.0 billion deficit, suggesting that export activity strengthened.

Meanwhile, the headline durable goods orders also printed an impressive 6.5% increase, nearly twice as much as the projected 3.5% gain. The core figure fell short of estimates with a 0.2% uptick versus the estimated 0.4% increase for June. Previous readings enjoyed small upgrades from 0.1% to 0.3% for the core version and from -1.1% to -0.8%  for the headline figure.

Underlying data revealed that the pickup was mostly due to a whopping 131.2% surge in aircraft orders while other components were mixed.

Initial jobless claims increased from 234K the other week to 244K last week, higher than the projected 240K increase and suggesting a bit of a slowdown in hiring. Preliminary wholesale inventories were up 0.6% versus 0.3% to signal that businesses have kept more products in stockpiles and might not need to ramp up production anytime soon.

Equities dip despite good earnings, spending

Risk aversion peeked back in the markets during the previous trading session and extended its stay during the New York hours. Even though big U.S. companies continued to churn out mostly stronger than expected earnings figures, equity indices closed mostly lower for the day, likely on profit-taking.

  • S&P 500 index is down 2.41 points to 2,475.42 (-0.10%)
  • Nasdaq is down 40.56 points to 6,382.19 (-0.63%)
  • Dow 30 index is up 85.54 points to 21,296.55 (+0.39%)

Investors also seemed to shrug off the news that the House of Cards – I mean, Representatives – approved the increase in military spending for next year. To add to that, Congress also gave the thumbs-up for the funds to start the construction of Trump’s border wall.

Canadian gov’t not pleased with hike?

Remember when the BOC decided to hike interest rates by 0.25% in their latest policy statement? Well, reports are mentioning that it looks like they haven’t cleared that with the big boys in government and PM Trudeau isn’t pleased.

As it turned out, officials in Ottawa are concerned that the BOC may have hiked interest rates too soon and that higher borrowing costs might dampen spending and trigger a downturn. However, Finance Minister Morneau and PM Trudeau himself declined to comment on the central bank’s independent decision.

Instead, Morneau stressed that the government has more work to do and has to keep its eye on the goal of boosting the middle class and spurring strong growth.

Major Market Mover(s):

 CAD

The Loonie returned some of its recent gains as market watchers worried that the BOC may have hiked too soon as some reports suggested.

USD/CAD popped back up to 1.2550, CAD/JPY retreated to 88.58, EUR/CAD recovered to 1.4661, and GBP/CAD is up to the 1.6400 mark.

USD

The Greenback managed to squeeze a few gains out of its peers thanks to a couple of strong data points.

EUR/USD dipped back to 1.1682, GBP/USD is down to 1.3067, USD/JPY recovered to 111.18, and USD/CHF pulled up to .9644.

Watch Out For:

  • 12:01 am GMT: U.K. GfK consumer confidence (-11 expected, -10 previous)
  • 12:30 am GMT: Japanese household spending y/y (0.6% expected, -0.1% previous)
  • 12:30 am GMT: Japanese national core CPI (no change from 0.4% expected)
  • 12:30 am GMT: Tokyo core CPI (0.1% expected, 0.0% previous)
  • 12:50 am GMT: Japanese retail sales y/y (rise from 2.1% to 2.3% expected)
  • 2:30 am GMT: Australian PPI q/q (0.6% expected, 0.5% previous)