The greenback advanced against most of its major counterparts as it appears that investor risk appetite is low.
- Looking at the end result of the US trading session, the major indexes finished relatively flat after mixed durable goods data and better than expected new home sales in the US.Â Durable goods posted strong results but missed analyst's expectations.Â New home sales jumped 9.6% to 433,000 in July and the previous month was revised higher.
- The GBPUSD plunged almost 200 pips to 1.6160 overnight, opening the Asian session at 1.6241.Â Expectations are that the Bank of England may maintain its quantitative easing program longer than any other central banks, weighing on the sterling in the medium-term.
- Today's preliminary or second reading GDP report could show the US economy contracted at a faster pace in the second quarter than previously estimated.Â The change is expected to show a 1.5% decline from April to June compared with the 1% drop reported last month. The US economy has shrunk 3.9% since last year's second quarter, marking the deepest recession since the 1930s.Â However, another report could show that claims for unemployment benefits fell to 565,000.Â If realized, this would be the first drop in three weeks.
- Over in Asia, there is a sell off dragging the MSCI Index to a one-week low, after China announced it could curb production on overcapacity in industries including steel and cement.Â The Japanese yen strengthened against all major currencies with the USDJPY reaching as low as 93.57; just over 100 pips from yesterday's high.
Currency to watch out for: EURUSD & GBPUSD
- The EURUSD pivot point is at 1.4285 with a preference to enter into short positions at 1.4275
- The GBPUSD pivot point is at 1.6275 with a preference to enter into short positions at 1.6265
Today's calendar and market movers:
- UK CBI Realized Sales expected to rise to -12
- US FOMC Member Lacker is due to speak about the economic outlook
- US Preliminary GDP quarter on quarter expected to drop to -1.5%
- US Unemployment Claims expected to fall to 565,000
- US equities ended yesterday's session flat with the three major indexes lower 0.01% to 0.04%.
- As of 06:25 GMT the Nikkei is at -1.56% and the Hang Seng at -1.26%.