Fundamental analysis – 16th August 2012


Dollar gained versus the euro and the yen on Wednesday. Sterling was the only currency, which closed the session at the opening prices versus USD. As for today, a lot of significant releases will be coming out of US, among them are construction data, initial jobless claims and Philadelphia Fed business outlook. Initial jobless claims should have climbed 4 K to 365 K last week. Philadelphia Fed business outlook is expected to improve from -12.9 to -6.5 in August. Housing starts may register 0.5% decrease in July versus +6.9% a month earlier. Building permits will most likely rise 1.3% m/m after the previous -3.1% m/m. Dollar islikely to stay attractive for investors, but strong growth is unlikely as market is concerned about another round of QE.


Euro slipped against the dollar on Wednesday, driven most likely by the news that Germany opposes ECB’s decision to purchase more government bonds. Negative sentiment towards the euro was triggered by the good news from the United States, which treasury yields continued to grow. Today investors will be looking at the final CPI assessment for July, expected to have been revised from -0.1% m/m down to -0.5% m/m. On an annual basis the index is likely to stay at +2.4% y/y. However, these data won’t produce any significant effect on the euro as the market is still uncertain and traders will prefer safe-havens, which is the dollar.


British pound managed to keep its neutral positions versus the dollar on the overnight session, bolstered by surprisingly positive UK economic news. Employment data came in quite optimistic – the number of jobless claims shrank by 5.9 K in July, while forecasts predicted growth by 7.0 K. International Labor Organization reported that total number of the unemployed decreased by 46 K in April-July, Unemployment rate slipped to 8.0%  after the previous 8.1%. In the spotlight today will be Retail sales in July. Forecasts expect no changes – 0.0% m/m, +1.6% y/y after +0.1% m/m, 1.6% y/y, although these data may come in with better results, taking into account recent Olympic games, held in Britain.


Japanese yen continued to decline versus the dollar on Wednesday as US treasury yields rose and USD/JPY pair hit new local maximums. Turning to today, Japan’s economic calendar is empty, so the yen will be driven by the news from the United States. However, it’s worth being cautious – further USD/JPY growth may be held back by weaker than expected data from the US on the one hand and the fact that yen has approached strong resistance levels on the other.

Written by Forex4you