USD/JPY

The US dollar continues to gain ground against the Japanese yen, as USD/JPY flirts with the 104 range early in the North American session. On the release front, Japanese Manufacturing PMI improved to 52.4 points, beating the estimate. US Unemployment Claims beat the estimate, coming in at 298 thousand. Later in the day, we’ll get a look at the Philly Fed Manufacturing Index. The markets are braced for a sharp drop in the July reading.
In a highly anticipated event, the Federal Reserve released its policy meeting minutes on Wednesday. The minutes were hawkish in tone, with the Fed saying that an interest rate hike could come sooner rather than later if employment numbers continue to improve. The Fed said that the economy continues to improve, but the QE program, which is scheduled to wind up in October, will not be accelerated. The US dollar was broadly higher after the release of the minutes and gained about 80 points on Wednesday at the yen’s expense.

Gold prices are lower on Wednesday, as the metal has slipped to two-month lows. The spot price stands at $1281.34 per ounce in the European session. On the release front, it’s a busy day in the US, led by two key events Unemployment Claims and the Philly Fed Manufacturing Index. On Wednesday, the Federal Reserve released its minutes, and the hawkish tone gave a boost to the US dollar and pushed gold prices lower.

Gold and French Preliminary GDP

Gold is stable in Wednesday trading, as the metal continues to stay close to the key $1300 level. The spot price stands at $1297.16 per ounce in the European session. It’s a quiet day on the release front, highlighted by the Federal Reserve minutes, which should be treated by traders as a market-mover. Inflation numbers in the US remain at very low levels. On Tuesday, CPI and Core CPI, the primary gauges of consumer inflation, both posted paltry gains of 0.1%. These weak readings come on the heels of PPI, a manufacturing inflation index, which also came in at 0.1% last month. Weak inflation is one reason why the Federal Reserve is in no rush to raise interest rates, as low inflation points to slack in the economy.
Despite broad interest rate cuts by the ECB in June, the Eurozone continues to limp along, including Germany, the region’s locomotive. Inflation and growth levels remain weak, as underscored by last week’s GBP and inflation releases. French Preliminary GDP remained flat at 0.0%, unchanged from a month earlier. German Preliminary GDP slipped to -0.2%, the first contraction in the German economy since Q4 of 2012. Eurozone Flash GDP also weakened to -0.2%, down from 0.0% in the previous release. All three GDP releases missed their estimates, and the weak numbers could push the euro even lower. On the inflation front, the news is not good, as deflation is a growing concern. Last week, Eurozone Final CPI dipped to 0.4%, down from 0.5% a month earlier. As well, German and French inflation numbers remained weak.

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Price and Profits

Gold rose 8.4 percent

Gold rose for the first time in three days in New York as investors weighed the standoff over Ukraine against a stronger dollar. Palladium was near a 13-year high.
Gold rose 8.4 percent this year partly as unrest helped fuel demand. Ukrainian government forces took control of one of four districts in the pro-Russian separatist stronghold of Luhansk, as the Red Cross said its working toward agreement on details of a safe-passage plan for a Russian aid convoy. Talks on a halt to the fighting stalled yesterday. Israel and Palestinian militants agreed to extend their five-day truce for 24 hours in another attempt to reach a long-term accord.
The dollar was near a nine-month high versus the euro amid signs of economic recovery that support the case for the Federal Reserve to raise interest rates. The Fed releases minutes of its July 29-30 policy meeting tomorrow and Chair Janet Yellen is due to deliver a speech on Aug. 22 at an annual symposium in Jackson Hole, Wyoming. Prospects for higher borrowing costs may support the greenback, and gold usually moves inversely to the currency.

GBP/USD Daily USD/JPY

 GBP/USD   Daily
13::10 GMT - After starting a bit higher today, the mkt. has leveled  off into a flat trade-still capped below the recent lows at  1.6750/60. Latter is res. followed by the 1.68 area. To the downside, very close sup. is at 1.6695/00 then 1.6654. N.I.
Despite broad interest rate cuts by the ECB in June, the Eurozone continues to limp along, including Germany, the region’s locomotive. Inflation and growth levels remain weak, as underscored by last week’s GBP and inflation releases. French Preliminary GDP remained flat at 0.0%, unchanged from a month earlier. German Preliminary GDP slipped to -0.2%, the first contraction in the German economy since Q4 of 2012. Eurozone Flash GDP also weakened to -0.2%, down from 0.0% in the previous release. All three GDP releases missed their estimates, and the weak numbers could push the euro even lower. On the inflation front, the news is not good, as deflation is a growing concern. Last week, Eurozone Final CPI dipped to 0.4%, down from 0.5% a month earlier. As well, German and French inflation numbers remained weak.

The US dollar has posted slight gains on Monday, as  trades in the mid-102 range late in the European session. On the release front, there is only one US release on Monday, NAHB Housing Market Index. The markets are not expecting any change from the previous release. Japan starts off the week with no releases on the schedule.
With the US continuing to suffer from low inflation levels, markets expectations have been low for key inflation indicators. On Friday, PPI, the primary gauge of inflation in the manufacturing sector, slipped to 0.1%, down from 0.4% a month earlier. This matched the estimate. Weak inflation is one reason why the Federal Reserve is in no rush to raise interest rates, as low inflation points to slack in the economy. On the manufacturing front, the Empire State Manufacturing Index plunged to 14.3 points, down from 23.6 points in the previous release. This marked a three-month low and was well of the estimate of 20.3 points.

AUD/USD

AUD/USD has edged higher on Thursday, as the pair trades in the low-0.93 range early in the North American session. On the release front, Australian MI Inflation Expectations dropped to 3.1% in July. In the US, Unemployment Claims climbed to 311 thousand, above expectations.
In the US, Unemployment Claims fell short of expectations. The indicator climbed to 311 thousand, marking a six-week high. The estimate stood at 307 thousand. Employment indicators are under the market microscope, as the strength of the labor market is one of the most important factors influencing the Federal Reserve regarding the timing of an interest rate hike. A rate increase is expected by mid-2015, but stronger economic data, especially on the employment front, could hasten a move by the Fed. Earlier in the week, JOLTS Job Openings hit its highest level in 13 years, although it too missed expectations.

Gold, USD/CAD and USD/MXN

Gold crossed above the $1300 level last week, climbing as high as $1322 on Friday. The precious metal has benefited as the crises in Ukraine and Iraq have worsened. The US has accused Russia of massing troops on its border with Ukraine, and tensions are high as the EU has slapped stronger sanctions on Russia, while Moscow has retaliated by banning many food imports from the West. In Iraq, Islamic State militants, who have captured large parts of Iraq, have attacked and displaced thousands of ethnic Kurds, which has resulted in a growing humanitarian crisis. US President Barak Obama has authorized air strikes against the militants in order to protect the Kurds and safeguard US interests. The situation in Iraq is volatile and could quickly destabilize even further. In Gaza, a 72-hour ceasefire is holding as negotiations between Israel and Hamas are being conducted in Cairo.

The Japanese yen is flat on Tuesday, as the pair trades slightly above the 102 line late in the European session. In economic news, today’s US highlight is JOLTS Job Openings, with the markets expecting a strong reading. In Japan, Revised Industrial Production posted a sharp decline of 3.4%, well short of expectations. Later in the day, we’ll get a look at GDP, one of the most important economic indicators, as well as the minutes of the last BOJ policy meeting.
Is the Japanese manufacturing sector in trouble? Japanese manufacturing indicators continue to post declines this week. Tertiary Industry Activity came in at -0.1%, short of the estimate of a 0.2% gain. Revised Industrial Production dropped 3.4% last month, its steepest fall since October 2012. Meanwhile, markets eyes on Japanese GDP, which will be released later on Tuesday. The markets are braced for a decline of 1.7%, in Q2, which would mark the first drop in economic activity since Q4 of 2012. Traders should be prepared for the yen to lose ground if GDP posts a weak reading.

 USD/CAD and USD/MXN are trading as a Nafta bloc as the Canadian dollar and Mexican peso take their cue from the greenback, says Camilla Sutton, chief currency strategist at Scotiabank. The pairs tend to trade in tandem when the US is the "epicenter," she says. "Right now, we have that because we have the improvement in U.S. data spurring a tremendous focus on the Fed and when they will start to enter a hiking cycle."