At 2:00 AM Germany July HICP m/m (exp 0.5%, prev 0.1%) Germany July HICP y/y (exp 2.0%, prev 2.0%) Germany July CPI m/m (exp 0.4%, prev 0.1%) Germany July CPI y/y (exp 1.9%, prev 1.8%) At 4:30 AM UK July Retail Sales m/m (exp 0.2%, prev 0.2%) UK July Retail Sales y/y (exp 3.4%, prev 3.4%) At 5:00 AM Eurozone July HICP m/m (exp –0.2%, prev 0.1%) Eurozone July HICP y/y (exp 1.8%, prev 1.9%) At 8:30 AM US Weekly Jobless Claims (exp 313.0k, prev 316.0k) US July Housing Starts (exp 1.405 mln units, prev 1.467 mln units) US July Building Permits (exp 1.40 mln units, prev 1.413 mln units) At 12:00 PMAugust Philadelphia Fed Survey (exp 9.0, prev 9.2)
With heightened risk aversion driving markets, the dollar and yen continue to benefit, while the British pound and euro remain laggards. US equities took another hit with the Dow losing over 167-pts on Wednesday as burgeoning fears of spillover from the subprime debacle linger. The increased cautiousness will likely prop the yen higher across the board as heavy unwinding of the carry trades persist.
US data due out today include weekly jobless claims, July housing starts, July building permits and the August Philadelphia Fed survey. Weekly jobless claims are seen slipping slightly to 313k, down from the previous week at 316k. Housing starts and building permits are both forecasted to reflect continued deterioration in the housing market, falling to 1.405 mln units and 1.40 mln units, respectively. Lastly, the August Philadelphia Fed survey is expected to slip to 9.0, down from 9.2 in July.
GBP Mired Near Lows
The sterling continues to suffer across the board from tempered expectations for further policy tightening from the Bank of England. Yesterday's MPC minutes from the August meeting weighed on the currency with the tone being unexpectedly dovish prompting markets to pare back sentiment for a 25-bp rate hike in September. Recent inflation reports, specifically the July CPI falling beneath the 2% target, reinforce the view that the BoE may remain on hold for the coming months.
In the session ahead, traders will look at July retail sales, seen largely unchanged from June at 0.2% m/m and 3.4% y/y. Cable hovers around 1.9865, with support seen at 1.9820, followed by 1.98 and 1.9750. Additional floors will emerge at 1.9715, backed by 1.9670 and 1.9620. Meanwhile, gains will target interim resistance at 1.99, followed by 1.9935 and 1.9960. Subsequent ceilings are eyed at 2, backed by 2.050 and 2.1.
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