News

With fears that the US recession is a near certainty for the second half of the year, today's data has supports two of the economy's most important and hardest hit sectors - the consumer and housing sectors. Little was expected from the University of Michigan's sentiment report as it was a revision for July's preliminary reading. However, the drop in gas and food prices as well as the stabalization in equities and jobless claims clearly had an impact in leading the indicator to a sharp upside change to 61.2 from the 56.6 reading initially reported. This was a significant reversal from an intially reported 28-year low and three-month high in its own right; but the true improvement comes from the details.

Top Pick: Australian Dollars There have been big moves in the Australian and New Zealand dollars. DailyFX Analysts are bullish Aussies and bearish Kiwis....

The dollar rally to this point has been impressive.  A continuation of the rally is expected. 

U.S durable goods orders unexpectedly rose 0.8% in June, as growing exports have offset weakness in the U.S. Orders ex transportation jumped 2.0% which is the highest in seven months, for the less volatile reading. Looking at the breakdown the improvement was led by a 5% increase in electronics and a 5.1% rise in primary metal orders. It was the second month of gains as last month’s flat reading was upwardly revised to 0.1%. Also the booking for non-defense capital goods advanced 1.4% signaling that future goods orders will remain strong. The data contrasts the dour housing and job data that crossed the wires yesterday. Yet, expectations are that growth will decline further as the effects of the fiscal stimulus package dissipate.

Fundamental Headlines

Talking Points
•    Japanese Yen: falls through 107.00 as equities dive
•    Euro:  rebound above 1.5700 on safe haven flows
•    British Pound: GDP lower but in line with expectations
•    US Dollar: Durable Goods U of M on tap

Japan’s Consumer Price Index surprised to the upside, putting inflation at 2.0% in the year to June versus expectations of 1.9%. Regardless, the Bank of Japan’s stated focus on supporting economic growth means policymakers will not be raising interest rates any time soon. Euro bears may give the single currency a bit of a respite as the calendar is largely uneventful for the forthcoming session. Traders will focus on the UK’s Gross Domestic Product figure for the second quarter as expectations call for a reading equivalent to the low since 1993.