Dollar Sees Another Strong Outing

Trading 30 août 2019 Commentaire »

The U.S. dollar had a good outing on Friday, extending recent uptick, and among the reasons for the greenback's rise in the session was the data showing a solid increase in U.S. consumer spending in July.

Concerns over trade tensions remained somewhat under check thanks to the two both China and the U.S. appearing keen on resuming negotiations from September.

The dollar index, which rose to 99.02, subsequently pared a substantial part of its gains. The index was last seen hovering around 98.80, up 0.3% from previous close.

Against the Euro, the dollar was trading at 1.0990, gaining 0.6%, after having recovered from the day's low of 1.1063.

In European economic news, Germany's retail sales declined at the fastest pace seen so far this year in July, signaling weak household spending at the start of the third quarter.

Retail turnover decreased a faster-than-expected 2.2% month-on-month, reversing a 3% rise in June, official data showed.

However, on a yearly basis, retail sales rebounded 4.4% after falling 1.6% in June. This was the fastest increase in three months.

Against Pound Sterling, the dollar was up 0.13% at 1.2166. In economic news from the U.K., house prices in the country increased 0.6% year-on-year in August, following a 0.3% rise in July, data from Nationwide Building Society showed.

The safe-haven Japanese currency Yen was up 0.25% against the dollar, with a unit of greenback fetching 106.25 yen, as against 106.51 yen late Thursday.

The dollar was up 0.2% at 1.3314 against the loonie, which fared fairly well against most other major currencies thanks to strong GDP data.

According to data released by Statistics Canada, the nation's real gross domestic product climbed by 0.9% in the second quarter, after edging up 0.1% in the previous quarter.

On an annualized basis, the GDP rose 3.7% in the second quarter, following a revised 0.5% rise in the previous quarter. Economists had forecast a 3% growth.

On a month-on-month basis, the gross domestic product rose 0.2 percent in June, the same rate as seen in May. Economists had expected a growth of 0.1 percent.

The dollar was up 0.32% at 0.9898 against Swiss franc. The Aussie got the better of greenback, gaining 0.12% at 0.6736.

The Chinese Yuan was down by about 0.2% at 7.1570 a dollar, ahead of implementation of new retaliatory tariffs on Sunday.

In economic news, a report from the Commerce Department said U.S. personal income crept up by less than expected in the month of July, rising just 0.1%, after climbing by an upwardly revised 0.5% in June. Personal income was expected to rise by 0.3% in July, compared to the 0.4% increase originally reported for the previous month.

Meanwhile, personal spending grew by 0.6% in July after rising by an unrevised 0.3% in June. Economists had expected personal spending to climb by 0.5%.

Revised data released by the University of Michigan on Friday showed U.S. consumer sentiment deteriorated by even more than initially estimated in the month of August.

The report said the consumer sentiment index for August was downwardly revised to 89.8 from the preliminary reading of 92.1.

The revised reading is down sharply from the final July reading of 98.4, showing the biggest monthly drop since December of 2012.


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Treasuries Finish Choppy Trading Day Modestly Higher

Trading 30 août 2019 Commentaire »

Following the pullback seen in the previous session, treasuries showed a lack of direction over the course of the trading day on Friday.

Bond prices spent the day bouncing back and forth across the unchanged line before moving to the upside going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1 basis point to 1.506 percent.

The choppy trading on the day came as traders expressed uncertainty about whether the U.S. and China will resume trade talks next month and finally reach an elusive trade deal.

President Donald Trump has repeatedly claimed the Chinese are desperate to reach an agreement, arguing the U.S. tariffs on Chinese goods are doing significant damage to the world's second largest economy.

Trump told Fox News on Thursday that the U.S. and China were scheduled to hold talks at a "different level," although he did not clarify what that means.

Meanwhile, China has signaled that they do not currently intend to retaliate against Trump's latest threat to raise the rate of tariffs on Chinese imports.

Chinese officials have expressed interest in negotiating an end to the escalating trade dispute but argued the U.S. has to create conditions for the two sides to resume talks on the basis of mutual respect.

A mixed batch of U.S. economic data also contributed to the lackluster performance on the day, as some traders looked to get a head start on the holiday weekend.

Early in the day, the Commerce Department released a report showing personal income crept up by less than expected in the month of July, although the report still showed a bigger than expected increase in personal spending during the month.

The Commerce Department said personal income inched up by 0.1 percent in July after climbing by an upwardly revised 0.5 percent in June.

Economists had expected personal income to rise by 0.3 percent compared to the 0.4 percent increase originally reported for the previous month.

Meanwhile, the report said personal spending grew by 0.6 percent in July after rising by an unrevised 0.3 percent in June. Personal spending had been expected to climb by 0.5 percent.

With spending rising by much more than income, personal saving as a percentage of disposable personal income slumped to 7.7 percent in July from 8.0 in June.

A separate report from the University of Michigan showed U.S. consumer sentiment deteriorated by even more than initially estimated in the month of August.

The report said the consumer sentiment index for August was downwardly revised to 89.8 from the preliminary reading of 92.1.

The revised reading is down sharply from the final July reading of 98.4, showing the biggest monthly drop since December of 2012.

Surveys of Consumers chief economist Richard Curtin noted the plunge in late 2012 reflected widespread fears of being pushed off the "fiscal cliff" due to then-impending increases in tax rates and decreases in government spending.

"The recent decline is due to negative references to tariffs, which were spontaneously mentioned by one-in-three consumers," Curtin said. "Unlike concerns about the fiscal cliff, which were promptly resolved, Trump's tariff policies have been subject to repeated reversals amid threats of higher future tariffs."

"Such tactics may have some merit in negotiations with China, but they act to increase uncertainty and diminish consumer spending at home," he added. "Unlike the repeated tariff reversals, negative trends in consumer sentiment cannot be easily reversed."

Following the long weekend, next week's trading may be impacted by some key U.S. economic data, including the closely watched monthly jobs report.

Reports on manufacturing and service sector activity and the U.S. trade deficit are also likely to attract attention along with the Federal Reserve's Beige Book.


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Oil Futures Settle Sharply Lower For The Day, Gain 1.7% For The Week

Trading 30 août 2019 Commentaire »

Crude oil prices declined sharply on Friday, with traders choosing to take some profits after prices shot up by nearly 6% over the previous three sessions.

Prices fell also due to possibility of a fall in energy demand due to the impact of Hurricane Dorian, now graded a Category 3 major storm. The storm is expected to gather strength and make a landfall in Florida late Monday as a Category 4 hurricane.

According to reports, a few refineries along the Gulf Coast are keeping a close eye on Hurricane Dorian.

According to a Reuters survey, OPEC's oil output rose 80,000 barrels per day in August, the first monthly increase this year.

Also, Russian Energy Minister Alexander Novak is reported to have said Russia's oil output cuts in August will be slightly below those agreed to under the deal between OPEC and non-OPEC producers.

West Texas Intermediate Crude oil futures for October ended down $1.61, or about 2.8%, at $55.10 a barrel.

On Thursday, WTI Crude oil futures ended up $0.93, or 1.7%, at $56.71 a barrel, after gaining about 2.4% and 1.6% on Tuesday and Wednesday, respectively.

Oil futures added 1.7% in the week, but lost over 6% in the month of August.

Oil futures climbed higher in the previous three sessions on falling inventories and on hopes energy demand will pick up on the emergence of some positive developments from upcoming U.S.-China trade talks.


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Gold Settles Lower For 3rd Straight Day, But Gains Over 6% In Month

Trading 30 août 2019 Commentaire »

Gold prices drifted lower on Friday, extending recent losses, as traders continued to go for riskier assets such as equities amid rising optimism about resumption of U.S.-China trade talks in September.

The dollar's continued strength contributed as well to the yellow metal's decline.

The dollar index moved past the 99 mark to 99.02, and was last seen at 98.97, up nearly 0.5% from previous close.

Gold futures for December ended down $7.50, or 0.5%, at $1,529.40 an ounce, the lowest level since

On Thursday, Gold futures for December ended down $12.20, or 0.8%, at $1,536.90 an ounce.

For the week, gold futures shed about 0.5%, although they gained more than 6% in August, surging ahead for the fourth straight month.

In economic news, a report from the Commerce Department said U.S. personal income crept up by less than expected in the month of July, rising just 0.1%, after climbing by an upwardly revised 0.5% in June. Personal income was expected to rise by 0.3% in July, compared to the 0.4% increase originally reported for the previous month.

Meanwhile, personal spending grew by 0.6% in July after rising by an unrevised 0.3% in June. Economists had expected personal spending to climb by 0.5%.

According to the report released by MNI Indicators, Chicago-area business activity unexpectedly returned to expansion in the month of August. MNI indicators said its Chicago business barometer jumped to 50.4 in August after tumbling to 44.4 in July. Economists had expected the index to climb to 47.5%.

Despite the jump by the Chicago business barometer, MNI Indicators said the survey still suggests a softer overall tone in business activity, as the three-month average dipped to 48.2.

On the inflation front, the prices paid index rose to a five-month higher of 59.8 in August, although it is still well shy of the 12-month high of 79.8.

Meanwhile, revised data released by the University of Michigan on Friday showed U.S. consumer sentiment deteriorated by even more than initially estimated in the month of August.

The report said the consumer sentiment index for August was downwardly revised to 89.8 from the preliminary reading of 92.1.

The revised reading is down sharply from the final July reading of 98.4, showing the biggest monthly drop since December of 2012.


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India Economic Growth Slows In June Quarter

Trading 30 août 2019 Commentaire »

India's economy grew at a slower-than-expected pace in the three months to June, preliminary figures from the National Statistics Office showed on Friday.

Gross domestic product grew 5 percent year-on-year, which was much slower than the 5.7 percent expansion economists had forecast. The pace of growth was reportedly the slowest in over six years.

In the same quarter last year, the economy grew 8 percent.

In the January to March quarter, the economy expanded 5.8 percent, which was the weakest since 2014-15.

In the March quarter, India's growth rate fell behind China's for the first time in nearly two years.


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Portugal GDP Growth Stable In Q2

Trading 30 août 2019 Commentaire »

Portugal's economic growth retained momentum in the second quarter, as weaker domestic demand was offset by a rebound in external demand, latest data from Statistics Portugal revealed on Friday, confirming the initial estimates released on August 14.

Gross domestic product grew 0.5 percent quarter-on-quarter, same as in the previous three months.

On a year-on-year basis, GDP growth was 1.8 percent, same as in the previous quarter.

In the fourth quarter of 2018, GDP rose 0.4 percent quarterly and 1.7 percent from a year ago.

In the second quarter, the contribution of domestic demand to the year-on-year GDP rate of change decreased, reflecting the deceleration of investment, the agency said.

In contrast, net external demand contribution was less negative than in the last quarter, as imports slowed more intensely than exports.


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Poland Growth Slows In Q2 As Estimated

Trading 30 août 2019 Commentaire »

Poland's economic growth slowed in the second quarter, in line with the initial estimates, latest data from Statistics Poland showed on Friday.

Gross domestic product expanded 0.8 percent sequentially, slower than the 1.4 percent growth registered in the first quarter.

On a yearly basis, economic growth eased to 4.2 percent from 4.6 percent in the preceding period. The flash estimate was 4.1 percent.

On an unadjusted basis, GDP advanced 4.5 percent annually after 4.7 percent growth in the previous quarter. The flash estimate was 4.4 percent.

Growth in domestic demand and gross capital formation led the second quarter expansion, the agency said.


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U.S. Consumer Sentiment Shows Biggest Monthly Drop Since Fiscal Cliff

Trading 30 août 2019 Commentaire »

Revised data released by the University of Michigan on Friday showed U.S. consumer sentiment deteriorated by even more than initially estimated in the month of August.

The report said the consumer sentiment index for August was downwardly revised to 89.8 from the preliminary reading of 92.1.

The revised reading is down sharply from the final July reading of 98.4, showing the biggest monthly drop since December of 2012.

Surveys of Consumers chief economist Richard Curtin noted the plunge in late 2012 reflected widespread fears of being pushed off the "fiscal cliff" due to then-impending increases in tax rates and decreases in government spending.

"The recent decline is due to negative references to tariffs, which were spontaneously mentioned by one-in-three consumers," Curtin said. "Unlike concerns about the fiscal cliff, which were promptly resolved, Trump's tariff policies have been subject to repeated reversals amid threats of higher future tariffs."

"Such tactics may have some merit in negotiations with China, but they act to increase uncertainty and diminish consumer spending at home," he added. "Unlike the repeated tariff reversals, negative trends in consumer sentiment cannot be easily reversed."

The steep drop by the consumer sentiment index came as the current economic conditions index slumped to 105.3 in August from 110.7 in July, hitting its lowest level since October of 2016.

The index of consumer expectations showed an even more substantial decrease, plunging to 79.9 in August from 90.5 in July. The index hit a matching level in January.

On the inflation front, the report said one-year inflation expectations inched up to 2.7 percent in August from 2.6 percent in July, while five-year inflation expectations ticked up to 2.6 percent from 2.5 percent.

The substantial deterioration in consumer sentiment shown by the University of Michigan represents a stark contrast to data from the Conference Board showing only a slight deterioration in consumer confidence.

The Conference Board released a report on Tuesday showing its consumer confidence index edged down to 135.1 in August after surging up to 135.8 in July. Economists had expected the index to show a much more significant decrease to 130.0.

"Consumer confidence was relatively unchanged in August, following July's increase," said Lynn Franco, Senior Director of Economic Indicators at the Conference Board. "While other parts of the economy may show some weakening, consumers have remained confident and willing to spend."

She added, "However, if the recent escalation in trade and tariff tensions persists, it could potentially dampen consumers' optimism regarding the short-term economic outlook."


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Czech Economy Retains Growth Momentum In Q2

Trading 30 août 2019 Commentaire »

The Czech Republic's economic growth remained steady in the second quarter, latest data from the Czech Statistical Office showed Friday.

Gross domestic product grew a seasonally-adjusted 2.7 percent year-on-year in the second quarter, the same as in the first three months after it was revised from 2.8 percent. The second quarter growth was in line with its flash estimate released on August 14. The quarter-on-quarter growth figure was revised to a seasonally adjusted 0.7 percent from 0.6 percent reported earlier. The economy had expanded 0.6 percent in the first quarter. Second quarter growth was supported mainly by domestic demand, the statistical office said.


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Chicago Business Barometer Unexpectedly Indicates Expansion In August

Trading 30 août 2019 Commentaire »

After two months of contraction, MNI Indicators released a report on Friday showing Chicago-area business activity unexpectedly returned to expansion in the month of August.

MNI Indicators said its Chicago business barometer jumped to 50.4 in August after tumbling to 44.4 in July, with a reading above 50 indicating growth in regional business activity. Economists had expected the index to climb to 47.5.

The bigger than expected increase by the business barometer came as the new orders index saw the largest single component monthly gain and shifted back into expansion.

The order backlogs index also surged up to 51.3 in August after three straight months below 50, rebounding strongly after hitting 43.5 in July.

The report said the employment index also rose slightly to 43.7 in August, although it remained in contraction for the second straight month.

Despite the jump by the Chicago business barometer, MNI Indicators said the survey still suggests a softer overall tone in business activity, as the three-month average dipped to 48.2.

On the inflation front, the prices paid index rose to a five-month higher of 59.8 in August, although it is still well shy of the 12-month high of 79.8.

The survey also found that 63 percent of firms intend to leave their current business investment plans for the remainder of 2019 unchanged, citing concerns about global uncertainties.


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