Forex Investment and Currency Trading

FOMC Meeting (August 5th): Market expects the FOMC to maintain its 2% Federal funds rate target this week for a second consecutive meeting. The economy continues its below-trend line expansion, hampered by the housing contraction, financial market strains and tight credit conditions, weak labor markets and high input costs. In describing the downside risks to growth, the Committee is unlikely to re-state that they have diminished. Recent increased financial strains induced more sober rhetoric from Chairman Bernanke in his semiannual testimony, likely to hold up here. But the FOMC will clearly state that upside risks to inflation and inflationary expectations remain, even while mentioning recent energy price relief.

Aug 4
8:30

Personal Income
Consumer Spending
Core PCE Deflator (June)

Although June payroll data suggested that wages and salaries advanced 0.2%, a partial unwind of the tax rebate program likely pushed personal income modestly lower. Market expects the tax rebates to add volatility to the personal income data for several additional months. Despite the rebates, retail sales were disappointing in June, especially vehicle sales, implying lackluster consumption growth. With core CPI trending up over the past several months, market expects a 0.3% rise in the core PCE deflator in June.

Aug 4
10:00am

Factory Orders (June)

Weakness in nondurable consumer spending, implying soft nondurable goods orders, likely partially offset the better-than-expected 0.8% gain in durable goods orders. Squeezed profit margins and muted aggregate demand should induce firms to trim orders and production over the remainder of the year.

Aug 5
10:00

ISM Non-Mfg Survey (July)

The Institute for Supply Management non-manufacturing survey likely posted another weak reading in July. The recent Federal Reserve Beige Book noted that demand for nonfinancial services was mixed, with strength in information technology and health care offsetting some weakness in other service sectors. It was also noted that transportation services were weak, real estate continued to decline, and banking activity was restrained.

Aug 7
3:00

Consumer Credit (June)

Falling vehicle sales and the recent tax rebate likely restrained consumer credit growth, with the rebate facilitating saving in the form of consumer debt repayment.

Aug 8
8:30

Productivity
Unit Labor Costs (Q2)

Market expects that productivity scored another solid gain in Q2 as nonfarm business sector output rose about 1.75% annualized even as hours worked declined 0.75%. With hourly compensation gains up just above 4%, market estimates that unit labor costs rose about 1.6% annualized.