USD news - page 8
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US August Flash Services PMI Declines to 6-Month Low
The Markit US PMI flash services-sector reading declined to 50.9 for August from 51.4 the previous month and the lowest reading since February. The data will maintain a cautious attitude towards the overall outlook, although this data series been relatively downbeat throughout 2016.
New work expanded at the slowest pace since May and below historic trends with concerns surrounding political uncertainty having some negative impact. There was, however, a further increase in order backlogs to the fastest rate since April 2015.
The increase in employment was at the slowest pace for 20 months with the need to cut costs and subdued demand conditions leading to more cautious hiring plans. According to Markit, the employment reading would be consistent with average monthly employment growth of around 130,000 and the Fed would be uneasy over tightening with employment growth at this pace unless there was clear evidence of rising inflationary pressures.
Although the overall rate of cost increases remained moderate, there were comments surrounding higher staff costs and food prices. The rate of increase in prices charged continued to increase at a subdued rate in August.
Service providers were more upbeat surrounding the prospects for growth during the next 12 months and well above June lows with expectations of a rebound in activity following the Presidential election.
The composite PMI output index declined to 51.5 from 51.8 the previous month.
The data overall maintains the relatively weak run of Markit services-sector data seen during 2016. Although persistent weakness will tend to lessen the impact expectations of an acceleration in growth will be muted.
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US Q2 GDP (second reading) +1.1% vs +1.1% expected
The goods news is that business investment wasn't quite as dismal as it looked and the consumer spending was even stronger. The worry is that the consumer isn't going to hold up, especially if auto sales tail off as anticipated.
U.S. Dollar Skyrockets As Fed Talks Rate Hike
Friday turned out to be a great day for the U.S. dollar. The greenback moved higher against all major currencies following Fed Chair Janet Yellen’s speech at Jackson Hole. Interestingly enough, it wasn’t her words that sent the dollar soaring. While Yellen said the rate-hike case strengthened in recent months, it was Fed Vice Chair Fischer’s comments that really sparked the rally in the greenback. He was explicit when he said Yellen’s comments were consistent with a possible September rate hike and that 2 rate hikes this year is possible. Throughout the past week, we heard consistently hawkish comments from U.S. policymakers who all seem to agree that the country is close to full employment and that inflation is on the rise. While some members like Fed President Powell still believe the central bank can afford to be patient, if next Friday’s nonfarm payrolls report is strong, the odds for a September hike will rise significantly.
Friday’s Fed comments served as a strong reminder to the market that no one is as hawkish as the Fed although Fed Fund futures are currently pricing in a 63% chance of a December rate hike, which is only slightly above even. But if jobs and wages surprise to the upside, those odds could shoot above 75%. Yellen and Fischer have done a great job of setting the bottom for the dollar and we anticipate further gains in the coming week. However Friday’s strong move took many major currency pairs to key technical levels -- 1.12 EUR/USD, 102 USD/JPY and 1.30 USD/CAD. Some of those levels have been broken while others have been tested, but either way, traders should look to buy the dollar on any shallow corrections. We expect USD/JPY to hit 104, EUR/USD to drop below 1.11 and GBP/USD to test 1.30.
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US personal income for July 0.4% vs. +0.4% est. Spending 0.3% vs. +0.3% est
Data for July 2016
Personal spending was up 0.3% vs 0.2% estimate. Like wages, the prior month was revised higher to +0.5% vs +0.4%. This is the 4th straight increase in spending.
US Aug consumer confidence 101.1 vs 97.0 expected
US consumer confidence for August from The Conference Board
The US dollar has caught a small bid after the release.
US MBA mortgage applications w-e 26 Aug 2.8% vs -21.% prev
US MBA weekly mortgage report
Rise in mortgage apps but 30-year rate remains unchanged
ADP August employment +177K vs +175K expected
Private US employment data from ADP
The US dollar liked the headlines. Beware that it's also month-end and the consistent theme over the past couple days of month-end has been dollar buying.
US July pending home sales +1.3% vs +0.7% m/m expected
Pending home sales data
The downward revisions to the prior make this much worse than it first appears.
• ADP report signals solid pace of jobs growth in August
• US ADP employment change came 177k in Aug. from 194k prev., slightly above the forecast of 175k.
• This raises speculation that the NFP print may also meet its forecast of 180k.
• Something like that could increase bets that the Fed is likely to hike in Sept. and thereby add fuel to the recent dollar rally.
US Initial jobless claims 263K vs. 265K estimate
4-week moving average 263K va 264K prior