- US housing starts rose by 15.7% to a 1.093 mln annualized rate The reading was significantly stronger than forecast even when taking into account a big upward revision, to 945k from 893k in June. Building permits also beat expectations and went up 8.1% to 1.052 mln from 973k a month earlier.
- US CPI amounted to 0.1% mom and 2.0% yoy in July, in line with expectations. Core inflation amounted to 0.1% mom and 1.9% yoy vs. median forecast of 0.2% mom. Food prices rose by 0.4% after growth by 0.1% In June. Several adverse factors were behind the gain - livestock disease, a long, ongoing drought in the Southwest and Russian sanctions. Most components of core inflation saw small price gains. The only drops in significant subsectors were in transportation (-0.7%) and used cars and trucks (-0.3%).
- We have reached the stop-loss level on our long position on the EUR/USD at 1.3325. The EUR/USD remains under pressure. 1.3300 and 1.3295 (November 2013 low) barriers were knocked-out despite very large bids, which is a strongly bearish signal. Today’s Fed minutes will define the strength of the USD for next hours.
- At GrowthAces.com we do not expect anything hawkish from Janet Yellen in Jackson Hole. That is why we still see a room for the recovery on the EUR/USD.
Resistance: 1.3364 (high Aug 19), 1.3392 (21-dma), 1.3399 (high Aug 18)
Support: 1.3254 (low Sep 13), 1.3243 (low Sep 11), 1.3230 (low Sep 10)
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- The GBP rebounded from four-month lows against the USD after Bank of England minutes showed two policymakers voted for an interest rate hike in August. Martin Weale and Ian McCafferty both voted to start raising interest rates this month. The minutes surprised the economists who forecast a 9-0 vote. Our forecast assumed only one dissenter (Martin Weale).
- The survey of the Confederation of British Industry showed on Wednesday that British factory orders grew faster this month as overseas demand picked up. Total order book balance rose to +11 in August from +2 in July. The export order balance picked up to -3 from -16, again above its average reading of -20.
- In our opinion rise in the GBP will not rise much. We have another inflation reading released after the BoE meeting showing that CPI is well below the BoE’s target of 2% now. Growth in wages, one of the most important indicator for the central bank, is slow and suggest considerable slack in the economy. Moreover, global macroeconomic outlook has worsened recently.
- GrowthAces.com stays flat on the GBP/USD. Our medium-term our outlook on the rate is slightly bullish. However, we are looking for better levels to buy the GBP/USD.
Resistance: 1.6722 (10-dma), 1.6728 (high Aug 19), 1.6739 (high Aug 18)
Support: 1.6567 (low Apr 7), 1.6555 (low Apr 4), 1.6507 (low Mar 26)
- Japan's exports rose 3.9% yoy in July from a year earlier. The rise followed a revised 1.9% yoy decline in June. Imports rose 2.3% in July. That resulted in a trade deficit of JPY 964.0 bn.
- The USD/JPY gained in the wake of the strong US housing data. The rate broke above the 103.00 and July highs at 103.15. The break above this level is a bullish signal and suggest further rise of the USD/JPY. We are looking to go long on the USD/JPY at 102.65.
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Resistance: 103.43 (high Jul 4), 104.13 (high Apr 4), 104.34 (76.4% of 105.45-100.76)
Support: 102.91 (hourly low Aug 19), 102.63 (hourly low Aug 19), 102.53 (low Aug 19)