Summary
The equity markets where mixed again today as a downwardly revised GDP was offset by better than expected corporate profits. The US Government approved a financial reform bill, which is expected to be moved into law in the very near future. The S&P 500 index was up 3 points to 1076, but closed down 40 points or 3.65 for the week.
Tomorrow's Events
EUR
M 6:00
German CPI
June
.1%
USD
M 12:30
Personal Income
May
.5%
.4%
JPY
M 23:30
Japan Employment Rate
5%
Japan Industrial Production
.3%
1.3%
Trading Opportunities
USD/JPY
The final revision to Q1 US GDP was disappointing in the headline and composition. It is mitigated on by the substantial upward revision in corporate profits. Overall GDP was revised to 2.7% from 3.0% previously and 3.2% advance reading. Consumption was cut to 3.0% from 3.5%. Equipment and software spending was revised to 11.4% from 12.7%. Net exports were a 0.82% drag rather than 0.66%. Blunting this was news that inventories contributed 1.87 percentage points, a little more than the 1.58% previously estimated. The USD was under pressure most of the week as investors have become less enthused about the US economy. In addition to the negative outlook from GDP, US housing was disappointing as Existing Homes Sales and New Home Sales where worse than expected. The USD/JPY moved to support, and a break of this level could see a quick liquidation.
USD/CAD
Canadian dollar is still flirting with key chart levels. The combination of soft to poor Canadian data and US data coupled with more neutral sounding Bank of Canada officials has made the Canadian dollar among the worst performing G10 currencies this week, losing about 2.1% against the US dollar. The Canadian dollar is pushing resistance levels near 1.0450. A return to risk trades will quickly move the USD/CAD back to the 1.02 level. Look for opportunities to short the USD/CAD.