At 2:45:00 AM E-12 France July Exports (exp n/f, prev 25.82 bln euros) E-12 France July Imports (exp n/f, prev 24.78 bln euros) E-12 France July Trade Balance (exp 1.0 bln euros, prev 1.0 bln euros) At 2:50:00 AM E-12 France August CPI y/y prelim (exp 1.8%, prev 1.6%) E-12 France August HICP y/y prelim (exp n/f, prev 1.6%) E-12 France August CPI m/m prelim (exp 0.2%, prev 0.0%) E-12 France August HICP m/m prelim (exp n/f, prev -0.1%).
The dollar is unchanged from its NY close against the European majors at 98.25 cents to the euro but down half a yen at a session low of 119.50. As expected, Thursday was a rough day for the dollar with weak economic data, a hawkish speech from President Bush, and caution from Federal Reserve Chairman Alan Greenspan about the risks of a sustained budget deficit, helping bring US stocks lower. US jobless claims surprised on the upside, as did a record trade deficit for Q2 at 129 billion.
US equity futures are again pointing to a negative opening after a spike higher and negative close on Wednesday was followed by a sharp 2.5% drop in stock indexes on Thursday. Overnight, Honeywell brought down its guidance when it issued a statement that the economic recovery is not happening, meaning September and October should conform to the historical difficulty of these months. With expectations coming down the still high valuations of US companies may have to follow, which could lead to a test or break of July lows.
In his testimony before the House Budget Committee, Federal Reserve Chairman Alan Greenspan did say that a war with Iraq did not mean the US economy would slip back into recession, unless the conflict was prolonged. Greenspan said a quick rise and fall in oil prices, like that of the Gulf War, would not have a serious impact on GDP. But the real key to double-dip recession worries is the consumer given that business continue to put off investment.
Today's key data is August retail sales, which is expected to rise 0.5% from the previous month, but only 0.1% without key auto purchases. A lower than expected figure would likely send the greenback lower and weigh on overall confidence in the economy because there is growing concern that the consumer is willing to spend on credit (ie homes, cars) but not with cash. Therefore, the U of Mich consumer sentiment survey for September will be watched for further weakness. Consensus estimate is for 87.5 in Sept from 87.6.
EUR/USD rose to an overnight high of 98.28, up from support at 97.50 after bouncing off key trendline support at 97.00 on Wednesday. Key resistance is seen at 98.90/99.00 which should contain the upside today in case of a further fall in US stocks and weak economic data. A break above here would target parity.
The Nikkei ended the week on a down note, falling nearly 2% today after rising four consecutive days. USD/JPY fell to a session low of 119.45 after advancing for six straight sessions but twice failing to break resistance at 120.65. Support is seen at 119.40 and 119. Resistance is seen at 119.80, followed by 120.40 and 120.65. //www.forexnews.com