Data Will Continue To Build

[mercaforex]

By Mercaforex

USD:
The USD struggled to find any footing on Monday as it lost ground to most of the major currencies. The U.S. equity market turned in another lackluster performance on Wall Street. However the Chicago PMI data produced a solid reading of 50.0 beating expectations. Today the ISM Manufacturing PMI report is on schedule and an outcome of 50.6 is projected, which would be an improvement on the previous number. Also making its way forward will be the Pending Home Sales data which expects to see an increase of 1.7%. The data this week will continue to grow in importance as the week progresses from the United States and culminate with the Non Farm Employment Change figures on Friday.
The crux of the matter for the USD has been that it and most of the other major currencies are trading within fairly tight ranges as the marketplace searches for consistency. Arguments abound about the real economy versus the perceived economy. Equity markets mounted gains for the most part during August and this has not gone unnoticed by bears who have continued to ask on what basis are we are seeing share prices do so well. Although growth is seemingly being promised by many a political leader it remains to be seen if this is merely the talk by leadership which is trying to stir optimism into a populace that is filled with caution. The month of September has been historically a brutal month on stocks when questions outweigh answers within investors. After a summer of gains being made on international bourses the question becomes how equities will be able to absorb additional ‘good’ news before it actually takes place. Thus investors may become keen on data, and with the advent of the Non Farm Employment Change numbers on the horizon, this may become the next big focal point to hang their hat on. The USD had a rather tough trading day on Monday and will get a chance to prove it was nothing more than a range movement today.
EUR:
The EUR was pushed a bit higher on rather uninspired trading Monday. The Italian Retail Sales figures were released and produced a disappointing outcome of minus -0.4% compared to the estimate of 0.2%. Today Germany stands next in line regarding Retail Sales numbers and a forecasted gain of 0.7% is projected. Also be on the outlook for the German Unemployment Change figures, a result of 33K is expected. Tomorrow Europe will offer their broad Revised GDP data. The combination of the German numbers today and the European GDP figures tomorrow could serve as an interesting tonic for investors who have been repeatedly told that an economic recovery is around the bend for the European Union. The ECB holds their interest rate meeting on Thursday and press conference, and this could produce some volatility for the EUR in the coming days if things do not go as planned.
GBP:
The U.K. had a banking holiday on Monday and the Sterling had a rather quiet trading day because of this until the Americans entered the marketplace and helped spur on some GBP interest. The U.K. will release its Manufacturing PMI reading today and an outcome of 51.5 is expected. The Halifax HPI, true to form, has been pushed back at least a day and may be reported tomorrow. Net Lending to Individuals will be reported today also. Prime Minister Gordon Brown was quoted yesterday as saying that his government will take an intensive look at excessive bonuses being paid in the financial sector. While this may have no direct bearing on the Sterling today it should be noted that politicians continue to take on a populace stance and this may spook some investors. The GBP held its ground on Monday on a day of little volume and today’s trading may provide a more intensive test for the currency.
JPY:
The JPY held its ground on Monday after continuing to make strong gains against the major currencies the past few trading sessions. The election results in Japan may have spurred on some positive trading within the Japanese equity market but questions remain regarding the new government’s actual policies and how they would implement some of the social packages they have been calling for. Investors may become cautious if the new government tries to alter the landscape too quickly. Even though the JPY has performed well the past week it is still within known ranges compared to the USD and it remains to be seen if it will be able to break out of this pattern.