Week in FX AMERICAS Fed FOMC Minutes

The Fed released the FOMC minutes this week and there were strong hints that the US Central Bank will make an announcement in the coming weeks about QE3. Fed Chairman Ben Bernanke is scheduled to speak August 31st at the Jackson Hole Economic symposium, although some analysts have suggested that the cryptic “fairly soon” in the minutes might be pointing at the US Presidential elections that happen in November.

Canada’s economic releases this week were negative to the currency, but the loonie rode the USD weakness to 3 month highs as the European Leader confidence boost took the EUR to 7 week highs and weakened the USD across the board.

Below are some other highlights of the week:


Americas

  • CAD: Canadian wholesale sales shrank unexpectedly in June (-0.1% to +$49.9b), the first drop in five-months, dragged down all the miscellaneous sector (-6.4%: Agric. -20.5%). The market was looking for a climb of +0.3% in June.
  • CAD: Canadian Retail sales also happened to surprise to the downside in June (-0.4% seasonally adjusted to -$38.69b ) as consumers spent less at department stores, gas stations and new-car dealers. Ex-autos also dropped -0.4% to erase May’s gain. The market again was expecting a headline print in the black ((+0.3%) and suggests that consumer spending did not contribute to domestic GDP. Many members judged that adding an easing bias would likely be warranted very soon,
  • Loonie Touches 3 month High on USD Weakness versus EUR | OANDA Forex Blog
  • FOMC: The Aug minutes were more openly dovish than had been expected. Further easing continues to be dependent on the strength of the economic data, especially NFP due out next week.
  • FOMC Minutes Aug 22 | OANDA Forex Blog
  • How the Fed Prepares Its Minutes | OANDA Forex Blog
  • USD: Existing home sales were up +2.3% in July to +4.47m. It was a bit weaker than expected and tied with March’s reading for the second weakest of the year. Despite what seems to be flattening print, non-distressed sales continue to make up a large portion of the total. Distressed were +24%, while non-distressed sales were up +3.7%.
  • US July existing Home Sales Rise | OANDA Forex Blog
  • USD: The +4k gain in weekly jobless claims (+4k to +372k)may not seem like much, but it could be key to the Fed’s decision on QE3. Everyone will be looking towards Bernanke’s speech at the Jackson Hole Economic symposium next week.
  • USD: Sales of newly built homes in the US rose last month (the third successive gain) to +37.2. Sales were up +3.6%, m/m, and +25.3%, y/y. Prospective homeowner’s face tightened credit conditions that make it harder to secure record low-mortgage rates.
  • Markit Releases US PMI | OANDA Forex Blog

 

EUROPE Week in FX

ASIA Week in FX

 

WEEK AHEAD

  • EUR Samaras-Hollande meeting
  • USD Consumer Confidence
  • EUR Harmonised Index of Consumer Prices
  • US USD Fed’s Beige Book
  • EUR Unemployment Change
  • USD Core Personal Consumption Expenditure – Prices Index
  • CAD Gross Domestic Product
  • USD Fed’s Bernanke Speech Jackson Hole Speech

 

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza