How Will The Markets React?
Traders may face yet another round of negative US economic data on Thursday, but with equity markets keeping their eyes on the prize of another possible rate cut by the Federal Reserve in October, forex traders may be the only ones paying heed to the news. First, annualized GDP for the second quarter is anticipated to be revised down to 3.8 percent from initial estimates of 4.0 percent. Nevertheless, even 3.8 percent marks a strong pace compared to the tepid 0.6 percent growth experienced in the first quarter. Furthermore, this indicator clearly looks back at the economy’s performance rather than looking ahead, which may limit its impact on the markets (barring a significantly worse-than-expected revision). One of the other factors that traders will be looking at is personal consumption for the same quarter, which is estimated to be confirmed at 1.4 percent. Nevertheless, this still represents the weakest rate since Q4 2005 and a sharp slowdown from the 3.7 percent pace we saw in the first quarter. With consumer confidence dwindling and the housing recession deepening, concerns have been brewing that spending will slowdown even further and serve to damage the already-fragile economy in coming quarters. Later in the morning, the release of new home sales may exacerbate this sentiment, as the Commerce Department’s index is estimated to plummet 5.2 percent to a nearly 10-year low of 825K. With borrowing costs remaining elevated (mortgage rates have actually risen since the Fed cut last week) and stricter lending regulations are making it more difficult to qualify for loans, the number of unsold properties on the market are rising quickly and pulling prices lower.
Source: http://www.dailyfx.com
Tags: forex,foreigne exchange,currency,euro,usd
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