FX Highlights

  • USD is trading marginally weaker to start the week consolidating sharp gains from Friday's trade sparked by the release of better than expected US employment report, the employment report encourages speculation that the US recession is ending, the trade is debating whether the USD correlation to risk sentiment is breaking down and if focus is shifting to improving US economic fundamentals, Japan's machinery orders rise, GBP pressured by deflation warning, AUD supported by Goldman upgrade of Asia and China's GDP outlook, EU investor confidence rises to one year high, Chinese banks to cap lending
  • Focus turns to this week's FOMC meeting, the release of US retail sales, CPI and Michigan consumer sentiment, the FOMC is expected to continue with quantitative ease and hold rate policy steady, the trade will be looking to see whether the Fed extends quantitative ease or signals the timeframe for possible exit from quantitative ease, no major US or Canadian economic data is scheduled for release today
  • Japan's June core machinery orders rise 9.7%, June current account surplus at ¥1.153 trln, July M2 rises 2.7%, JPY higher
  • Daily Telegraph reports that the BOE will downgrade economic forecasts and warn about risk of deflation, GBP lower
  • Australia's June housing finance rises 1.1%, AUD higher
  • EU Sentix index improved to -17 from -31.3 last month, EUR mixed
  • The Financial Times reports that China's banks have been ordered to slow lending
  • Economist Krugman says US economy on the cusp of recovery, recovery expected to be weak
  • Bloomberg reports that the Fed is reluctant to declare the recession has ended because of continued weakness in commercial real estate
  • Goldman Sachs raises its GDP forecasts for Asia and China
  • President Obama says jobs data shows worst of downturn may be behind us, stimulus is helping the economy to recover, rising stocks helping Americans 401k plans, no real recovery until the economy stops loosing jobs
  • US equity markets set to open lower, European equities 1% lower, Nikkei closed 122 points higher

Upcoming Events

  • US- Monday, no major economic data is due for release, FOMC meeting begins Tuesday
  • CAN- Monday, no major economic data is due for release