Forex4you - Analytics

    Forex4you

    565.50 6.50/10
    60% of positive reviews
    Real

    Dollar rises as strong employment data continues to propel rate hike expectations

    USD

    The dollar rose on Friday after data from the previous day, showing a further fall in Jobless Claims to its lowest level in 40-years, continued to impact, after it increased expectations that the Federal Reserve would soon decide to press the button and raise interest rates.

    Initial Jobless Claims in week-ending July 16 had been expected to fall by 1,000 to 280k, however, in the end it fell by 26,000, to 255k, easily beating those expectations. With a fall in Continuing Claims as well it provided further evidence of a tightening labour market.

    At her testimony to the Senate banking committee last week, Janet Yellen said that a rate hike was likely: “at some point this year,” and the strong jobs and housing data of recent days continues supporting that. Current expectations posit January 2016 as the most probable time for lift-off, however, September has also been suggested as a possibility.

    Data from Markit showing an unexpected rise in Manufacturing PMI to 53.8, from 53.6 previously and no-change forecast, also supported the dollar on Friday.

    EUR

    The euro weakened on Friday after data from Markit showed a fall in Manufacturing and Services activity in the Euro-zone, as well as in the bloc’s two largest economies Germany and France, which put a slight dampener on recovery hopes, although as Markit itself said in the accompanying statement the slide was only marginal given the events in Greece at the time, which provided an especially unpredictable backdrop.

    Euro-zone Manufacturing PMI in July fell to 52.2 from 52.5 previously, when it had been forecast to remain unchanged. Services PMI fell to 53.8 from 54.4 when it had been forecast to fall to a 54.2.

    In Germany Manufacturing fell to 51.5 from 51.9, no-change expected; and Services to 53.7 from 53.8 previously when it had been forecast to rise to 53.8.

    In France the data showed Manufacturing PMI down to 49.6 from 50.7 – a significant fall as it marked a change from expansion to contraction. A rise to 50.8 had been the consensus estimate.

    On the Services front, July PMI’s fell to 52.0 from 54.1 against expectations of a drop to 53.8.

    Greece just started fresh negotiations with the ECB, E.U Commission and the IMF to wrap up a 3-year 86bn bailout deal, however, the latest reports suggest the IMF is taking a more radical stance and slowing down negotiations. The global lender of last resort wants a debt right-down as part of the deal as it sees the size of Greece’s massive debt burden as unsustainable long-term.

    Commentary from ECB’s Nowotny signalled much lower chances of Grexit after he said the likelihood had fallen substantially. This reduced one major source of uncertainty for the single currency.

    GBP

    The pound weakened on Friday after the previous session’s poor retail sales data continued to weigh.

    Thursday’s data had shown an unexpected dip of -0.2% in Retail Sales in June when a rise had been expected instead. The undershoot questioned hopes that a strong recovery in the U.K might lead the BOE to hike rates earlier that previously expected.

    The only hard news out on Friday was Mortgage data from the British Banking Association, which showed a healthy rise in the number of mortgages issued in June to 44480 from 42876 previously. Analysts had been expecting av rise – but a lower one to only 43300.

    JPY

    The dollar-yen pair remained flat in the Asian session and was trading at 123.86 per dollar at 14.30 hours in the London session.

    The IMF has warned that the Japanese economy is unlikely to grow as strongly as the Abe administration wishes in the medium term due partly to a labour shortage in the ageing society, but also to the drag caused by the country’s huge level of national debt, which could rise to triple the size of the economy by 2030.

    Prime Minister Abe´s government decided last month to aim for a real expansion of 2.0% or more to attain its 2020 fiscal reform goal. But in an annual report on the Japanese economy the IMF said on Thursday: “Growth is projected to stabilize at around 0.7% over the medium term”.

    In an update of the World Economic Outlook report the IMF projected that the Japanese economy would expand an annualized real 0.8% in 2015 and 1.2% in 2016. But the projection could fall short due to the continuously weak consumption and insufficient measures for fiscal and structural reforms.

    As if to support the Abe administration´s optimism, early morning data showed that the preliminary estimate of Japan´s PMI climbed to a 5-month high level of 51.4 in July following a reading of 50.1 in the previous month, highlighting economic growth in Japan is picking up.

    Looking ahead investors will be closely monitoring Japan´s retail trade and consumer prices data due for release next week.

    USD

    The dollar rose on Friday after data from the previous day, showing a further fall in Jobless Claims to its lowest level in 40-years, continued to impact, after it increased expectations that the Federal Reserve would soon decide to press the button and raise interest rates.

    Initial Jobless Claims in week-ending July 16 had been expected to fall by 1,000 to 280k, however, in the end it fell by 26,000, to 255k, easily beating those expectations. With a fall in Continuing Claims as well it provided further evidence of a tightening labour market.

    At her testimony to the Senate banking committee last week, Janet Yellen said that a rate hike was likely: “at some point this year,” and the strong jobs and housing data of recent days continues supporting that. Current expectations posit January 2016 as the most probable time for lift-off, however, September has also been suggested as a possibility.

    Data from Markit showing an unexpected rise in Manufacturing PMI to 53.8, from 53.6 previously and no-change forecast, also supported the dollar on Friday.

    EUR

    The euro weakened on Friday after data from Markit showed a fall in Manufacturing and Services activity in the Euro-zone, as well as in the bloc’s two largest economies Germany and France, which put a slight dampener on recovery hopes, although as Markit itself said in the accompanying statement the slide was only marginal given the events in Greece at the time, which provided an especially unpredictable backdrop.

    Euro-zone Manufacturing PMI in July fell to 52.2 from 52.5 previously, when it had been forecast to remain unchanged. Services PMI fell to 53.8 from 54.4 when it had been forecast to fall to a 54.2.

    In Germany Manufacturing fell to 51.5 from 51.9, no-change expected; and Services to 53.7 from 53.8 previously when it had been forecast to rise to 53.8.

    In France the data showed Manufacturing PMI down to 49.6 from 50.7 – a significant fall as it marked a change from expansion to contraction. A rise to 50.8 had been the consensus estimate.

    On the Services front, July PMI’s fell to 52.0 from 54.1 against expectations of a drop to 53.8.

    Greece just started fresh negotiations with the ECB, E.U Commission and the IMF to wrap up a 3-year 86bn bailout deal, however, the latest reports suggest the IMF is taking a more radical stance and slowing down negotiations. The global lender of last resort wants a debt right-down as part of the deal as it sees the size of Greece’s massive debt burden as unsustainable long-term.

    Commentary from ECB’s Nowotny signalled much lower chances of Grexit after he said the likelihood had fallen substantially. This reduced one major source of uncertainty for the single currency.

    GBP

    The pound weakened on Friday after the previous session’s poor retail sales data continued to weigh.

    Thursday’s data had shown an unexpected dip of -0.2% in Retail Sales in June when a rise had been expected instead. The undershoot questioned hopes that a strong recovery in the U.K might lead the BOE to hike rates earlier that previously expected.

    The only hard news out on Friday was Mortgage data from the British Banking Association, which showed a healthy rise in the number of mortgages issued in June to 44480 from 42876 previously. Analysts had been expecting av rise – but a lower one to only 43300.

    JPY

    The dollar-yen pair remained flat in the Asian session and was trading at 123.86 per dollar at 14.30 hours in the London session.

    The IMF has warned that the Japanese economy is unlikely to grow as strongly as the Abe administration wishes in the medium term due partly to a labour shortage in the ageing society, but also to the drag caused by the country’s huge level of national debt, which could rise to triple the size of the economy by 2030.

    Prime Minister Abe´s government decided last month to aim for a real expansion of 2.0% or more to attain its 2020 fiscal reform goal. But in an annual report on the Japanese economy the IMF said on Thursday: “Growth is projected to stabilize at around 0.7% over the medium term”.

    In an update of the World Economic Outlook report the IMF projected that the Japanese economy would expand an annualized real 0.8% in 2015 and 1.2% in 2016. But the projection could fall short due to the continuously weak consumption and insufficient measures for fiscal and structural reforms.

    As if to support the Abe administration´s optimism, early morning data showed that the preliminary estimate of Japan´s PMI climbed to a 5-month high level of 51.4 in July following a reading of 50.1 in the previous month, highlighting economic growth in Japan is picking up.

    Looking ahead investors will be closely monitoring Japan´s retail trade and consumer prices data due for release next week.


    To leave a comment you must or Join us


    By visiting our website and services, you agree to the conditions of use of cookies. Learn more
    I agree