US Morning Notes - USD lower, China to increase overseas investment

Posted by admin as Forex News

FX Highlights

• USD is trading lower despite improving US economic data, reaction to strong US durable goods and housing data was muted, equity markets trading mixed to lower, China plans to increase overseas investment targeting Japan, JPY higher, USD now cheaper to borrow than JPY for first time in 16 years reflects easing of credit market fears, UK house prices rise the most since 2006, UK CBI sales weaken, GBP continues to underperform, EUR higher as German consumer confidence improves and retail demand falls, Australia’s CAPEX spending rises more than expected
• Focus turns to today’s release of jobless claims and preliminary Q2 GDP
• China’s CIC says China to increase overseas investment tenfold
• Wall Street Journal carries an article titled “USD now cheaper to borrow than JPY”, USD borrowing costs dropped to the lowest level in 16 years relative to JPY rates, the narrowing of the yield gap may generate less incentive to borrow in JPY to fund investments, JPY at five week high
• Australia’s Q2 CAPEX rises 3.3%, AUD sharply higher
• EU July M3 rises 3%, July leading economic index up 1.6%, German consumer confidence rose to 15 month high increasing to 3.7 from 3.4% in August, EU retail PMI fell to 47.1 from 47.3 last month, EUR higher
• UK August CBI retail sales fall to -16 from -15, August house prices rise 1.6%, Q2 business investments fall 10.4%, GBP lower
• Fed Lockhart says its premature to consider rate hike, expects subdued or lackluster US recovery and protracted unemployment
• Fed Lacker says US economy is leveling out
• US equity markets set to open mixed, European equities mixed, Nikkei closed 162 points lower

Upcoming Events

• US- Thursday, jobless claims for week ending August 22nd will be released expected at 550k compared to 576k last week along with Q2 GDP expected at -1.4%
• CAN- Thursday, Wednesday, no major Canadian economic data is due for release today