Daily Fundamental Analysis - Lackluster Data From The U.S.
bforex Research - 29 July 2010

USD
A day of range trading was experienced on Wednesday as the markets tried to interpret rather disappointing data and news from the States. Core Durable Goods turned in a disappointing drop of minus -0.6% compared to the estimated gain of 0.6%. Also the Federal Reserve’s Beige Book report did not provide a glowing outlook on economy. Today weekly Unemployment Claims figures will make their way forth and a number of 457K is anticipated, this would be a slight improvement on last week’s result of 464K. The jobless problem in the U.S. remains a concern to investors who fear that without an improvement in employment that the housing and consumer sectors will remain weak. Yesterday’s poor Durable Goods numbers and tepid Beige Book report are clear signs that the American economy remains sluggish.

Tomorrow the Advance GDP will be brought forth and a gain of 2.5% is the forecast. It will be of keen interest to investors to see if the GDP number meets expectation or underperforms. A double dip recession has been a talking point for the U.S. economy for nearly a month based upon the lack of improvement in data. Investors have been said to be standing on the sidelines for a couple of months as they have taken a wait and see approach, thus making the broad markets a domain for traders who have been making their daily bread on the back of speculation and ranges. The USD after having trended very well against the EUR and GBP for over half a year has suddenly ran into a wall of resistance. The question is if this is a ‘short term’ move or a ‘sea change’ in fundamental movement. With so many questions hovering over international economies it is a safe wager to say what is happening to the USD is a short term movement, and that its safe haven status may find renewed interest down the road.

EUR
Another day of rather tight range trading met the EUR on Wednesday. Cautious trading has been a highlight of the past two days. The German Prelim CPI numbers met expectations head on yesterday with a result of 0.2%. Today the German Unemployment Change numbers will be brought forth and tomorrow Germany will publish it Retail Sales figures. In the short term it appears that the EUR may actually trade under a dollar centric mode. For the time being it appears that questions regarding the Sovereign Debt crisis and concerns regarding austerity measures and growth have been digested by traders. The EUR has enjoyed a gain in value the past couple of weeks and going into these two last days before the weekend could see range trading be the prevailing theme.

GBP
The Bank of England was in the spotlight yesterday as Governor Mervyn King and other members testified. The BoE warned that the risks to the economy remain tangible and that while it agrees on interest rate policy, its members are not in agreement regarding other issues such as inflation and austerity measures. The Sterling maintained its gains made from the previous day of trading and continues to inch towards its high water marks. Today the Nationwide HPI will be published and an estimate of minus -0.2% is anticipated. The U.K. has turned in better than forecasted data the past week, but storm clouds still exist and it is logical to believe that not all the data will continue to be positive. There will be no major data from the U.K. tomorrow. The Sterling has done particularly well the past couple of weeks and may provide opportunity for traders seeking to range trade today.

JPY
The JPY moved in a consolidated manner versus the USD on Wednesday. This as Asian bourses mirrored their counterparts and struggled following the lackluster data from the States. The AUD traded in range also yesterday and it did this as commodity prices continued to move in a consolidated manner. Gold finds itself around 1168.00 USD per ounce, which is near the weaker side of its range. Many traders are watching Gold carefully using it as a barometer of risk appetite. As the EUR has done better the past few weeks, Gold has struggled.

About the Author
Chief Fundamental & Commodities Expert Robert Petrucci has worked in Financial & Commodity businesses for over fifteen years, including Physicals, Futures, and Options trading in Chicago and other international locations. Robert began as a broker in Chicago and has gained a vast amount of experience through various positions including trading, risk management, and analysis.
Robert@BForex.com - Please contact Robert Petrucci directly with any questions or comments you may have about the analysis.

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