Friday July 30th, 2010
Good morning,
Another day of tug and war between the buy-side and sell-side interests. Currencies still chop sideways, and so far month-end interest is raising volatility but that’s about it.
Canadian GDP was up 0.1% in May from flat reading in April, which was as expected.
U.S. Advance GDP for Q2 was 2.4% just shy of consensus 2.5% (although traders were gearing up for a print closer to 2.0%) and prior 3.7%. I wouldn’t read too much into this number as it will be revised (usually drastically) next month when more data becomes available. Nonetheless, the numbers tell us that the recovery is still appearing to be a jobless one as businesses are still investing in technology, which increases productivity with fewer workers. The result is consumers are less vigorous spenders and as they account for 70% of GDP…well you can do the math.
Chicago PMI just released at a whopping 62.3 easily beating analysts’ expected 56.0 and prior 59.1. Interesting to see this one rise when the Philly and N.Y. ones fell…I wouldn’t get too excited yet, but it is cautiously optimistic and is the first data in the last little bit to buck the trend of a slowing manufacturing sector. Could bode well for Monday’s national ISM Manufacturing PMI data. Hearing that Goldman thinks ISM number will be nasty… Another positive for risk today is the revised University of Michigan Consumer Sentiment popping up to 67.8 compared to expected 67.3 and prior 66.5.
Risk aversion is being pitted against the soft U.S. GDP as we note that equities are flashing red as are commodities via CRB index (-0.35%) and largely the USD is gaining a bit of ground. The loonie, however, is contradicting this and has actually gained about ¾ of a cent in the last hour as GDP differentials between the two countries are in Canada’s favour, and the month-end selling of USD’s against CAD seems to have arrived in time for the London fixing. Still no real clear bias in this pair or any for that matter…
Movements are looking silly with many 20-pip air-balls being tossed around, but not unusual for the last day of the month (and especially in the thin summer market conditions).
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