Dollar bulls weren’t in the mood to charge in today’s U.S. session as they chose to book some of their profits from the previous rallies. After all, it’s almost the end of the week, month, and quarter!
Price action was calmer than usual on the lack of top-tier catalysts and on fading enthusiasm for Fed rate hikes and Trump tax cuts. The Aussie and franc also lagged behind their peers while crude oil ticked lower.
- U.S. final GDP upgraded from 3.0% to 3.1% for Q2 2017
- U.S. initial jobless claims up from 260K to 272K vs. 269K forecast
- U.S. goods trade deficit narrowed from $63.9B to $62.9B vs. $65B forecast
- U.S. preliminary wholesale inventories rose by 1.0% vs. projected 0.4% gain
- Outgoing FOMC member Fischer: Dot plot reflects rate forecasts, not facts
- Fed official George: Q2 showed a good rebound, economy to keep growing
Mixed remarks from Fed officials
Another day, another round of remarks from Fed officials! However, dollar traders didn’t get much tightening clues from outgoing FOMC Vice Chairman Stanley Fischer and non-voting member Esther George.
Fischer gave a speech called “Reflections on the Framework Today” at the Bank of England’s conference in London, so it’s understandable that he didn’t say much about U.S. monetary policy. But in responding to one of the questions during the presser, he did clarify that the Fed’s dot plot for rate projections are merely forecasts and not facts.
Meanwhile, Fed official Esther George was more cheery in acknowledging that U.S. Q2 growth represented a solid rebound over Q1. She went on to say that the economic expansion is likely to continue since Uncle Sam is in much better shape than before.
George also shared a brighter outlook for the global economy than before but reiterated that a gradual pace of rate hikes is still appropriate for now.
Mostly upbeat U.S. data
Uncle Sam’s numbers were mostly in the green, underscoring the odds of more Fed tightening moves down the line. For one, the Q2 2017 GDP reading was upgraded to 3.1% even as most analysts thought it wouldn’t budge from the previously reported 3.0% figure.
This third GDP estimate was based on more complete data compared to the earlier figure reported last month. Underlying data revealed that the positive revision was due to higher private inventory investment while other components were unchanged.Initial jobless claims, on the other hand, were slightly worse than before at 272K versus the previous 260K figure and the 269K consensus. The goods trade deficit, which usually serves as a leading indicator for the trade balance, narrowed from $63.9 billion to $62.9 billion in August instead of widening to $65 billion.
Components of the report revealed that exports rose by $0.3 billion since July to $128.9 billion in August to reflect healthy external demand for U.S. products while imports dipped $0.6 billion to $191.8 billion. U.S. equities managed to close in the green:
- Dow 30 index is up 40.49 points to 22,381.20 (+0.18%)
- S&P 500 index is up 2.88 points to 2,509.92 (+0.11%)
- Nasdaq is up 0.19 points to 6,453.45 (+0.01%)
Major Market Mover(s):
The scrilla carried on with its slide from the previous trading session and was the worst-performing currency for the day.
USD/JPY slipped from a high of 113.21 to 112.43 (-0.36%), USD/CAD is back down to 1.2433 (-0.34%), NZD/USD is up to .7229 (+0.43%), and EUR/USD rose 33 pips to 1.1780 (+0.28%)
The Aussie was also in the red as traders seem to be bracing for the Chinese PMI readings due in the next sessions.
AUD/NZD fell to 1.0859 (-0.37%), AUD/JPY tumbled 29 pips to 88.25 (-0.33%), AUD/CAD is down to .9762 (-0.30%), and GBP/AUD is up to 1.7108 (+0.32%)
Watch Out For:
- 10:45 pm GMT: New Zealand building consents m/m (-0.7% previous)
- 12:01 am GMT: U.K. GfK consumer confidence index (dip from -10 to -11 expected)
- 12:30 am GMT: Japanese household spending y/y (+1.0% expected, -0.2% previous)
- 12:30 am GMT: Japanese national core CPI (rise from 0.5% to 0.7% expected)
- 12:30 am GMT: Tokyo core CPI (increase from 0.4% to 0.5% expected)
- 12:30 am GMT: Japanese unemployment rate (no change from 3.8% expected)
- 12:50 am GMT: Japanese preliminary industrial production (+1.8% expected, -0.8% previous)
- 12:50 am GMT: Japanese retail sales y/y (2.5% expected, 1.8% previous)
- 2:30 am GMT: Australian private sector credit (another 0.5% uptick expected)
- 2:45 am GMT: Chinese Caixin manufacturing PMI (dip from 51.6 to 51.5 expected)