An outlook of slowing growth for the worlds largest economy has found a greater following in the past few months, but todays sole indicator has eased worries somewhat. Though todays release adds some fundamental fuel to the bullish tank, its lack of market moving potency was clearly reflected in price action.
In the EURUSD, Friday afternoons range solidified itself in a 40-point band between 1.2815 and 1.2855. The same held true for against the British pound. The GBPUSD major capped a 55-point congestion band below 1.8990, just short of the psychologically important 1.90 figure. Relative action for the USDCHF increased significantly in the early hours of trade. A 15-point range over the Asian and European widened to a 50-point dollar drop just below 1.24. Finally, the USDJPY seems the only pair with clear direction. After making a sharp turn on 117.50, a rising trend channel has taken control and brought the cross up to 118.20 resistance.
Fundamental indicators are in short supply this week, a scenario made all the worse for volatility players as Thanksgivings day in the US looks to draw many big traders away for a four-day weekend. However, before the market liquidity grinds down, the Conference Boards Leading Indicators Index for October provided better bearings for the greenback to follow. Meeting the markets general forecast for a 0.2 percent increase, the months read initially marked a seven-month high while also accelerating for the third consecutive month. On the other hand, these statistics were offset somewhat when the previous months 0.1 percent increase was revised upward to 0.4 percent growth. This adjustment to Septembers number was isolated to a few influential components. Consumers took the brunt of the downward pressure when the consumer goods orders sub-gauge was revised from a 0.01 percent contraction to a 0.2 percent drop. Easily offsetting the easing in the consumer sector, demand for capital goods jumped from a 0.01 percent addition to a 0.37 percent contribution to the overall gauge.
Aside from Septembers upward revision, there are a few interesting details about the following months report. From the Leading branch, which is considered a reliable forecasting tool for growth in the coming three to six months, there were two pairs of indicators working to offset each other with large moves. From the decliners, the productivity measure of Pace of Deliveries component dropped 0.27 percent while the gauge measuring building permits held in negative territory with a 0.17 percent deduction on the overall indicator. The latter is of particular interest to the currency market, as Fridays reaction to much weaker than expected housing starts and filings can attest. However, the cumulative 44 basis points subtracted between the two could not overcome the strength in money supply growth and consumer expectations. Together, these two measurements cover both inflation and growth for the economy, and both bode well. With the light economic calendar, currency traders were also looking outside of the usual macro-economic releases this morning. Always in the back of most traders minds, crude oil was piquing the masses interest. The nearby contract slipped one percent to $58.35 in the opening hours of the day as warmer than average temperatures in the Northeast moderated demand worries.
Equities indices were jostled in the first half of Mondays session as the pull on weak performances by Asian and European stock groups was competing with the push of a number of merger and acquisition deals that went well beyond $50 billion for the day. By 15:55 GMT, the Nasdaq Composite was pacing market with a 0.29 percent advance to 2,452.93. The S&P 500 trailed with a 0.7 percent gain of its own to 1,402.21 while the Dow edged 0.05 percent lower to 12,336.81. Topping the headlines and movers lists, shares of copper giant Phelps Dodge Corp. surged $26.80 or 28.2 percent to $121.82 after announcing its part in a buyout. Freeport-McMoRan Copper & Gold offered $26 billion to pull the two firms together and create the largest copper miner in the world. Breaking its own record, a deal between Blackstone Group and Equity Office Properties Trust marked the biggest REIT deal in history. Estimated to be a $20 billion deal, shares of Equity Office Properties Trust rose 7 percent on a $3.15 advance to $47.87.
Like Forex, treasuries markets were heading into a shortened week with little economic foundation to support a big rise. Ten-year notes slipped 2/32nds to 100-04 with yields a basis point higher at 4.607 by 15:55 GMT. T-Bonds were even less active in a 1/32nd slip to 96-31 while its yield went unchanged at 4.69.
