Reply #11: daily dollar watch [View All]

[UpInArms]

http://quotes.ino.com/chart/?s=NYBOT_DX&v=i

Last trade 85.44 Change +0.11 (+0.13%)

Dollar Leery In Joining Optimism Aroused By Empire Report

http://www.dailyfx.com/story/dailyfx_reports/cross_markets_data_reaction/Dollar_Leery_In_Joining_Optimism_1163640346092.html

Empire Manufacturing Survey (NOV) (13:30 GMT; 08:30 EDT)

Actual: -1.6%
Consensus: -0.5%
Previous: -1.3%

How Did the Markets React?

While today’s regional factory indicator buoyed equities and Treasury yields on their respective markets, dollar traders were somewhat wary over the bullish allusions the leading report held for broader strength in the industry. US manufacturing accounts for 15 percent of total GDP, and today’s release from the Federal Reserve of New York is the first in a series of regional surveys that will conclude with the nationwide ISM number on December 1st. Breaking down the survey’s components reveals certain weak and strong points underlying general business conditions. The demand-related gauges were of primary concern when the report was first read. Both shipments and orders grew over in November to five-month highs. Also worthy of note from the list of numbers was the jump in the employment component, which advanced 5.1 points to 24.5, the highest level in the indicator’s nine-year history. The one downside to activity in the area was the price pass-through. While businesses lower prices in order to stay competitive, costs had subsequently rebounded for the first time in five months according to the percentage of respondents reporting on the data. Nonetheless, stocks and yields moved higher on the headline number as both markets sought out bullish news. However, currency traders were skeptical over the performance of the indicator that had digressed from every other factory read in October, especially with the CPI report on deck.

...more...

Tomorrow's Economic Releases: US CPI To Settle Inflation Dispute

http://www.dailyfx.com/story/calendar/key_events/Tomorrow_s_Economic_Releases__US_CPI_1163636152885.html

US Consumer Price Index (YoY) (OCT) (08:30 GMT; 13:30 EDT)
(Headline) (Core)
Consensus: 1.5% 2.9%
Previous: 2.1% 2.9%

Outlook: Inflation in the consumer basket is expected to decelerate for a second month in October as cheaper gasoline prices continue to offer relief to Americans. Predictions for a headline drop of 0.3 percent over the month should subsequently pull the annual figure of growth down to a 1.5 percent gait. Considered one of the most important price gauges behind the Fed’s monetary policy meetings, such a contraction in the year-over-year value would pull it below the central bank’s 2.0 percent target rate. With two October inflationary gauges already in print, the expectations for the CPI seems almost staid. Last week, the import price index reported a repeat 2.0 percent drop for the month while breeching into negative territory in the annual measurement for the first time since September of 2002. More recently, and considered fundamentally more correlated to the consumer read, the producer price index reported its own disappointing numbers for inflation hawks. The headline monthly read reported its biggest decline in history while the core print for the same period marked a 16-year negative watermark. Though both of these indicators fully support outlooks for the headline CPI figures, there is a disparity in the core numbers. Economists expect annual inflation to remain its decade-high 2.9 percent pace through October, even as underlying PPI and Import indicators slid. Should all the CPI reads follow suit with the previously released price gauges, the Fed’s tone could turn much more dovish as inflation warnings are phased out.

Previous: The consumer price index contracted once again in September, reflecting the steepest decline in energy prices through the multiple month easing. During the month, the energy group reported a sizable 7.2 percent drop in total value, the biggest one-month decline since November of last year. Isolating the petrol products to media-magnetized gasoline, prices at the pump plunged 13.5 percent. On the basis of these volatile products, headline inflation slipped 0.5 percent following a 0.2 percent slide over August. In the more closely watched annual report, the specific gauge eased from a 3.8 percent pace of growth to 2.1 percent. Comparing today’s inflationary picture from that of 12 months ago, the marked change was fundamentally dampened on the realization that Hurricane Katrina was wreaking havoc on energy prices in 2005. With this in mind, the real surprise was the tick higher in the core report. Excluding the effects of the more volatile components in the index, annual inflation actually ticked higher to 2.9 percent, its highest since February of 2006. From the number of underlying price groups, a 0.3 percent rise in housing and rental costs proved a few of the prominent factors for the month. With the opposing contraction in overall and rise in core prices, economists expect the Fed to pass on any changes to monetary policy in the immediate future.


US Net Long-term TIC Flows (SEP) (14:00 GMT; 09:00 EDT)

Consensus: $70.0B
Previous: $116.8B

Outlook: The net purchases of US assets indicator (TICS) is expected to retrace from its record high in August, with the market consensus pegging a $72.0 billion surplus. During the period, the allure of both debt and equity instruments grew as benchmark indices rose. For stocks, both the Dow Jones Industrial Average and S&P 500 indices rose to new multi-year highs as investor optimism grew in tandem with steady labor strength and a large drop in energy prices. Elsewhere, the treasury market was also on the move higher as it grew increasingly clear that the Federal Open Market Committee would not raise lending rates again as the housing market tumbles into its full-blown slump and headline price pressures ease. Over the month, the benchmark ten-year T-note rose 0.6 percent to a recent high. On the other hand, though the government paper with corporate debt in tow was taken higher on reduced expectations for yields, the same Fed stance could have turned some foreign investors off of bonds as a long-term investment. With the Fed leaving the Federal Fund rate at 5.25 percent, the nation’s benchmark return will not overtake the yield of Australian and New Zealand instruments, while European and British rates continue to play catch up. All of this will diminish the attraction of US debt. When the TICS data hits the wires though, it will not be digested in isolation. The market will compare the September contraction in asset purchases to the bigger than expected drop in the same period’s physical deficit.

Previous: Net foreign investment in US assets grew to a record $116.8 billion in August on the back of a 14-month low $32.9 billion in the month prior. The large jump in purchases more than doubled expectations for the month as foreigners tuned into the Fed’s decision cap 17 consecutive interest rate hikes. As would be expected, the treasury group reported the biggest response to the change in policy. Over the month of August, net purchases of T-bonds and notes jumped $46.3 billion from a modest $6.6 billion the previous period. Riding the government assets’ coattails, government agency debt rose $31.3 billion while purchases of corporate bonds climbed $37.5 billion. Still stuck in a congestion area on many of its benchmark indices, stocks were only contributing modest gains to the overall report. Buying of corporate stocks grew only $4.4 billion during the month. While the record was strong in its own right, its relationship with the physical deficit was producing even more optimism. After an earlier release revealed that the goods and services trade shortfall grew to a record $69.9 billion, the strong foreign investment suggests that the US will be able to fund its trade accounts into the future.

US NAHB Housing Market Index (NOV) (18:00 GMT; 13:00 EDT)

Consensus: 30
Previous: 31

Outlook: The National Association of Home Builders confidence index looks to match September’s 15-year lows, as a slowdown in construction spending sours outlook on the housing sector. Such a result would challenge initial calls for a bottoming out in the home building sector, but would perhaps prove unsurprising to those who continue to call for further housing weakness. There are accordingly relatively few bright spots for the real estate sector, but a recent improvement in housing starts could in fact help builder’s confidence come in above expectations. Analysts cite falling mortgage interest rates and falling energy prices as potential drivers of a bounce in the housing sector. Markets remain cautious, however, and wait to see tomorrow’s NAHB confidence results to gauge the likelihood of such an improvement.

Previous: Home builder confidence unexpectedly improved through the month of October, suggesting that the worst may be over for the embattled industry. Driving the gains, NAHB members reported an improvement of buyers’ traffic through prospective properties, with the relevant expectations index gaining four points to 41 on the month. This failed to spill over into actual sales, however, as the index of completed sales remained at 32 within the same period. The marginal improvement in the overall index perhaps masks the fact that the sentiment tracker has fallen 37 points in the calendar year. Thus housing bulls will likely contain their renewed optimism ahead of substantive improvements in sales and home prices.

...more...