US Morning Notes – USD higher, ECB bank loan loss warning, weak China PMI

by Forex Trading HQ on August 2, 2010

in North America Forex Report

FX Highlights

  • The USD is trading higher in reaction to an ECB report warning that European banks may face additional €195 billion in write-offs and China reports weak PMI, EUR trades at a fresh four-year low versus the USD in reaction to rumors of possible additional sovereign debt downgrades in Europe (France /Italy), GBP outperforms supported by report of improving UK PMI and gains in cross trade to the EUR, RBA holds rate policy steady as expected, commodity currencies trade lower pressured by declining equity markets, JPY trades higher tracking risk sentiment
  • Focus turns to the release of US construction spending, ISM manufacturing and new car sales and BOC policy decision
  • RBA leaves rates unchanged at 4.5%, Australia’s retail sales rise 0.6%, April building approvals fall 14.8%, May PMI drops 3.5 points to 56.3,AUD lower
  • China’s May PMI falls to 53.9 from 55.7 last month
  • ECB warns that European banks face additional write-offs estimated at €195bln, EU April employment rose to its highest level since June of 1998 at 10.1%, May manufacturing PMI falls to 55.8 from 57.6,EUR lower
  • UK May manufacturing PMI rises to a 15 month high, GBP lower
  • Swiss may PMI rises to 66.4 from 65.9 last month, Q1 GDP rose by 0.4%,CHF lower
  • Fitch cut Spain’s debt rating to AA+ from AAA outlook stable
  • Fed Chairman Bernanke says extended period language may be dropped as lending improves and the Fed plans short term auctions that could eventually be used as a tool for tightening policy
  • US equity markets set to open lower, European equities 2% lower, Nikkei closed 57 points lower

Upcoming Events

  • US- Tuesday, April construction spending will be released expected at -0.1% compared to 0.2% last month along with May ISM manufacturing index expected at 59.7 compared to 60.4 last month and May new car sales expected at 8.8mln
  • CAN-Tuesday, no major Canadian economic data is due for release today, BOC policy decision

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