The US Dollar was down in overnight Asian trading after healthy housing data and an upward revision to the U.S. GDP figures caused new speculation that the Fed will maybe delay implementing any stimulus measures, sending investors away from stocks, the USD and commodities and moving towards the sidelines in preparation for the symposium at Jackson Hole, Wyoming on Friday.
Yesterday, the release of the Federal Reserve’s Beige Book showed that whilst manufacturing continues to face some difficulties, the economy continues to show signs of recovery. Housing data continues on the upside too with the National Association of Realtors announcing that its index of pending home sales increased 2.4% in July, beating expectations for a 1.0% increase. From this time last year, pending home sales increased 15.0% in July, outpacing market expectations for an 11.1% increase, after having risen by 8.4% in June.
Yesterday was also the release of GDP figures which showed that the world’s largest economy grew at an annualised rate of 1.7% from April to June, higher than the 1.5% previously estimated, but is a slowdown from 2% in the first three months of the year. The 1.7% annualised rate in Q2 is equivalent to 0.43% quarter-on-quarter growth. This compares favourably with the 0.38% quarterly growth reported in the previous estimate.
The economy in the US is proving to be one of the largest talking points of the US presidential election this year. It is now widely thought by investors that Federal Reserve chairman Ben Bernanke will offer more clarity on the health of the economy when he gives his speech at the annual gathering in Jackson Hole, Wyoming on Friday. For the previous two years Bernanke has used the conference of the world’s central bankers, to signal the Federal Reserve’s intentions and investors appear to be waiting for a third significant event with the greenback falling against nearly all major currencies
The USD was down 0.05% against the EUR, down 0.06% against the GBP, down 0.13% against the JPY, down 0.03% against the CHF and down 0.22% against the AUD.
With one firmly on Jackson Hole tomorrow (Friday) there is still much volatility left in the markets today with German unemployment figures released in the morning, GB mortgage data and Italian 5 and 10 year debt auctions. The afternoon sees jobless numbers in the US released and Japanese CPI and unemployment figures published, making this a potentially volatile and profitable days trading.