The U.S. Dollar traded unchanged against the majority of its Forex counterparts while investors awaited the release of major U.S. economic reports on Thursday. Market investors kept an eye on the economic calendar as they hoped the announcements would reflect the optimism denoted in the speech delivered by the Federal Reserve's Chairwoman at the Wyoming symposium. And according to official publications, preliminary metrics on Gross Domestic Product revealed that the economy grew by 4.2 percent in the second quarter, more than the expected 3.9 percent. The Department of Labor also said that the number of individuals who filed for initial Unemployment Benefits in the week that concluded on August 22 dropped by 1,000 to 298,000 after posting at a modified 299,000 in the prior week. The data was seen as positive since economists predicted the Unemployment Benefit Claims would go up by 1,000. The greenback held steady against the majority of its counterpart subsequent to the releases.
Gold Prices went up to the highest level in one week ahead of macroeconomic releases out of the U.S. Futures for December delivery climbed 0.79 percent and traded at $1,293.50 a troy ounce on the Comex during the European market hours. And according to commodities experts, gold-supported funds which surged to record prices in 2011 have become less useful for forecasting market prices. After ten years of fluctuating almost in tandem, gold and exchange-traded products supported by gold have achieved the most negative correlation in a decade. ETPs are now declining, fluctuating in the opposite direction of Futures traded in the New York Mercantile Exchange.
In the Euro region, the reports were not all that positive. Germany revealed that the number of unemployed individuals went up in July, while analysts had predicted a decline. Furthermore, preliminary metrics indicated that Consumer Price Inflation in Spain fell by more than anticipated. The Euro benefitted from speculation that the European Central Bank may not implement added stimulus measures, an assumption investors made after Wolfgang Schaeuble suggested that central bank's President, Mario Draghi's comments were "over-interpreted." The British Pound rose to a five-day high versus the greenback as risk appetite rose in the foreign currency exchange in expectation of news out of the U.S. In the U.K., the Confederation of British Industry confirmed that Realized Sales climbed to 37 in August after coming in at 21 in the prior month, posting the highest reading in six months.
The Yen dipped slightly against the U.S. Dollar while there were no key economic releases out of Japan, and most fluctuations centered on the strength of the greenback. Today, Japan will issue a line-up of economic reports including Industrial Output and Retail Sales. Prime Minister, Shinzo Abe is assessing the country's outlook to decide whether it will be appropriate to raise the sales tax again in the coming year. But the slowdown of the economy, and the fact that the fiscal budget is possibly going to surpass 101 trillion Yen have the analysts and the Premier re-thinking the issue. The Yen rallied against most majors after the Ukrainian President, Petro Poroshenko gathered the country's Security Council. He indicated that the council would have to come up with new plans, as the situation in the eastern region appears to be getting worse.
The Australian Dollar reached a three-week-high against its U.S. peer on data showing that Business Investments suddenly rose. According to the statistics bureau, capital expenditures have gone up in the last three months for the first time since the third quarter of 2013. According to analysts, the dramatic drop of iron ore prices, together with increased wagers that the Federal Reserve may raise the borrowing costs could prompt the Aussie's depreciation, and at the same time provide relief for Reserve Bank's governor, Glenn Stevens, who said that the Aussie is overvalued. New Zealand's Dollar gained as the greenback dipped before the announcement of important data. In the small South Pacific nation, Fonterra, the largest dairy exporter said that in 2015, Farmgate's payouts will be of $6 per kilogram of solid products, and added that Australia will link with a major company to provide China with infant formula. The releases set investors at ease especially as they believed the news would be negative.
EUR/USD- Unemployment Rises
The EUR/USD went up on Thursday as the Dollar weakened ahead of the release of key economic fundamentals. Germany disappointed with lackluster data showing that the number of individuals out of work climbed by 2,000, while economists predicted the numbers would drop by 5,000. In other news, Spain's Consumer Price Inflation dipped at a yearly rate of 0.5 percent in August. The decline was bigger than analysts expected. And in Italy, sources say that prices are falling as well. Every item, from vegetables and fruits to hotel accommodations is lower in price. Economists worry that Italy, which is already denoting a lack of growth since 2008 may join Greece, Portugal and Spain in reporting record yearly consumer price drops. Experts believe that lower consumer prices must be weighing on policy makers and therefore the European Central Bank may be forced to take action in order to salvage the economy. ECB President Mario Draghi indicated that the monetary authorities have the tools needed to bolster growth and fight deflation. The EUR/USD erased gains later in the day and came close to a previously reached 11-month low following news out of Germany divulging that Consumer Price Inflation stagnated in August.
GBP/USD- Debate May Not Impact Sterling
The GBP/USD advanced on Thursday ahead of Scotland's elections. The Scotts will go to the polls to vote on whether they want independence or to continue being part of a union with England – something which has lasted for 307 years. The pair rallied on speculation that the event won't impact the British Pound. On the data front, Realized Sales reached a six-month high of 37 in August after printing at 21 in July. Investors sat quietly throughout most of the day waiting to close the month and obtain important data due out. Releases published this week indicated that Mortgage Loans fell due to strict measures implemented in April, aimed at slowing down the real estate market.
USD/JPY- Tensions Rise Again
The USD/JPY fell as a hike in tensions between Moscow and Kiev caused an increase in risk aversion in the money market. The Yen paired gains versus the greenback on reports indicating that the U.S. economy expanded at a faster pace than anticipated in the months of April to June. But the USD/JPY resumed its decline on news that Ukraine's President called on his Security Council to provide a plan to deal with the rebels in the Eastern part of the country, where fighting continues.
AUD/USD- Private Expenditures Beat Forecasts
The AUD/USD rallied on news revealing that Australia's Capital Expenditures advanced 1.1 percent in the year's second quarter, beating predictions for a 0.3 percent increase. The announcements took investors by surprise and prompted the hike of the AUD/USD. The Reserve Bank reiterated its warning against counting on new policies that may result in a bigger supply of mortgage financing, as these could pose several risks. Other reports indicated that China's government introduced new mini-stimulus measures aimed at averting growth challenges. These are designed to help the agricultural sector, bolster investments in facilities and improve the environment. The People's Bank of China provided financial institutions with a bigger re-lending quota and reduced the rates to help the farming industry. Analysts believe that any improvements in the Chinese economy will benefit Australia, its major trade partner. In the South Pacific Nation, reports of a further decline in iron ore reignited concerns especially as the prices are hovering close to the lowest level in five years. Speculators worry that a hike in supply could spell trouble.
Today's Outlook
Today's economic calendar shows that Japan will publish data on Construction Orders and Housing Starts. The Euro region will issue German Retail Sales, CPI, Core CPI, and the Unemployment Rate. The U.K. will release Business Investment metrics as well as Nationwide HPI. The U.S. will announce Core PCE Price Index, Personal Spending, Chicago PMI, Michigan Consumer Sentiment and Expectations.