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+0.22 (+0.24%)Dollar Rebounds As China Tries To Manage Speculationhttp://www.dailyfx.com/index.php?option=com_content&task=view&id=2451&Itemid=39US Dollar
The US dollar rallied once again thanks to new attempts by China to downplay their latest currency move. In order to prevent speculation from getting out of hand, the Chinese central bank came out with a statement on its website to clarify recent press coverage pertaining to the comments made by Central Bank Governor Zhou who said a few a days ago that the move by China was an "initial 2% adjustment" and that they will gradually continue to reform the country’s exchange rate system. Today, the People’s Bank of China released a statement that said even though Zhou used the word "initial", it is wrong to think that "an initial move (which) warrants further actions in the future." To them, "gradualism" is key and it appears that China may be trying to convince the markets that gradualism means that changes will be done over the course of months or even years. The market has become so conditioned to analyzing each word that is used or not used by the central banks around the world that Zhou’s comments had the press talking about more moves by China in the near term. The market may have to get use to the fact that the Chinese may not be as careful as Greenspan and the Federal Reserve have been when it comes to their choice of words and they reserve the right to retract them, like they have done in the past. Yet once again, we caution against completely writing off future moves by China. The Chinese have a history of surprising us by moving faster than expected. Their latest statement may be nothing more than an attempt to manage expectations and speculation. The only piece of economic data released today was the Conference Board‘s consumer confidence report which fell from 106.2 to 103.2 in July. Both the present conditions component and the expectations component fell, which could be partially attributed to the recent attacks in London as well as the spike in oil prices.
...more...Tomorrow's Economic Release Alerts: U.S. Durable Goods Orders Look To Retracehttp://www.dailyfx.com/index.php?option=com_content&task=view&id=2458&Itemid=39US Durable Goods Orders (JUN) (12:30 GMT, 8:30 EDT)
Headline
Consensus: -1.0%
Previous: 5.5%
Ex-Transportation
Consensus: 1.0%
Previous: -0.3%
Outlook: For the month of June, it’s no surprise that economists are expecting a retrenchment to -1.0% after last month’s 5.5% surprise on transportation orders. With a return to a more stable level of order volume in aviation, the monthly change against last month’s number will likely be quite negative. There are, of course, risks to this assessment. Since the Paris Air Show actually occurred in early June, Boeing saw a large number of orders last month as well. Although the number is lower than the 200 seen in May, it’s still rather high at 162. Meanwhile, the Fed recently reported a 2.9% jump in automobile and parts output in June. Excluding the transportation sector, new orders of durable goods is expected to have grown 1.0% in the month. Investment in equipment and software will probably remain high though receding slightly from first quarter numbers. According to economists, core capital goods (excluding defense and aircraft) should’ve seen a larger increase this month as businesses cut back in May in order to use up existing stockpiles.
Previous: Total durable goods orders were up 5.5% in May, 4 percentage points higher than the forecast of 1.5%. Almost the entire increase was due to the 200 orders for aircraft received by Boeing after last week’s Paris Air Show. Nondefense aircraft and parts rose 164.8% between April and May and this contributed to a total increase in transportation orders of 21.2% over the month. Excluding transportation, the change in new orders for durable goods thins to a drop of 0.2%. Going further into the core activity, things just keep getting worse as the figure drops further once defense-related orders are removed. Despite the blockbuster headline number, the report didn’t actually bring good news for the economy. The details show that business investment is really slowing since the growth in orders of nondefense capital goods excluding aircraft was -2.3% while shipments only grew 0.2% compared to 1.4% in April. Buying has slowed down since durable goods inventories are at close to a two-year high when adjusted for the current rate of sales signaling that the business investment portion of second quarter GDP could be lower.
...more...Have a Great Day Marketeers!
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