NY Open: Which way the Fed?

The US dollar opened in New York with minor gains across the board. The drop in Initial Jobless Claims to 212,000 from 210,000 last week, and an unchanged June Housing Price Index (Actual 0.2%) reminded traders of yesterday’s somewhat hawkish FOMC minutes. However, the soft Markit Manufacturing, Services and Composite data may be an early warning signal about the impact of tariffs on the economy.
Traders are looking ahead to headlines and sound-bites from the Jackson Hole Symposium that gets going tomorrow, as other than the US Durable Goods Orders data (forecast -0.5% vs previous 2.0%) it is the only game in town.

Wall Street is flat to slightly higher. Traders are cautious as US/China tariffs take effect but have taken the Federal Open Market Committee minutes in stride. President Trump’s problems are but a distraction.

Oil prices have hung on to most of yesterday’s gains sparked by the Energy Information Administration’s news of a 5.83 million barrel drawdown in US crude inventories. However, gains have been capped by the China/US trade spat which could lower global growth. WTI gains halted below $68.30/barrel which capped rallies for the past week, but the trend is positive while prices are above $66.00/b.

EURUSD and GBPUSD are the only G10 major currencies to rise since the open. EURUSD is supported, in part by Bundesbank president and European Central Bank Executive Council member Jens Weidmann. He reiterated his belief that it was time for the ECB to roll back its stimulus policies as inflation is consistent with its target. The intraday technicals are bullish with the uptrend line from last week’s 1.1298 low intact while prices are above 1.1510. A break above minor resistance at 1.1620 targets the downtrend line from May which comes into play at 1.1680. A break above 1.1750 would target 1.1990.

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EURUSD (daily, source: Saxo Bank)

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