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DAILY FUNDAMENTAL ANALYSIS: ISM NUMBER COULD SURPRISE

|Includes: RiskMetrics Group, Inc. (RISK), USD

 USD

The USD traded in range against the EUR on Tuesday and managed to gain a bit versus the GBP. Trading remained rather tentative as the U.S. produced a mixed bag of data for investors to study before the onslaught of jobless releases gets underway today. While the SP/CS Composite-20 HPI and the CB Consumer Confidence readings both bettered their estimates, the Chicago PMI Index came in worse. Today the ADP Non Farm Employment Change number is on the calendar and is expected to have an outcome of 20k. Also the ISM Manufacturing PMI data will be brought forth and the forecasted outcome is 53.2. While the jobless data today will be of interest the potential exist for the ISM Manufacturing PMI result to cause a flurry in the broad markets if it should turn in a surprise.

President Obama was able to find a microphone yesterday and tell the American public that the economy is his main mission, but it is probable that many people already assumed this. With September now started the U.S. will go into full election campaign mode and politicians are certain to be just as nervous as investors. A cynic might add that President Obama has shown a ‘sudden’ interest in the unemployment situation that ‘coincidently’ comes the same week the government will issue its official Non Farm Employment Change data on Friday. The jobless statistics this week are not expected to bring much joy and the downbeat prospects for the U.S. economy are causing concerns to flourish among investors. August proved to be a difficult month for Wall Street, but it also brought out throngs of safe haven trading as the USD gained in value.

EUR 

The EUR managed to trade in range against the USD on Tuesday as it found some stability. The EUR has certainly been under a dollar centric shadow the past few weeks as heightened talk about a downturn in the U.S. economy has raised eyebrows among investors who are concerned about the implications this has for Europe. The German Unemployment Change number came in below expectations yesterday, but it is their counterparts in the E.U. which have largely caused nervousness. German will release its Retail Sales numbers today and a gain of 0.6% is expected. Tomorrow The ECB will hold it monetary policy meeting and press conference and this will be a key spectrum for investors. The EUR traded under pressure the past few weeks as risk adverse sentiment reemerged and with nervous markets still in the midst, opportunities may exist to test ranges.

GBP

The Sterling moved a bit lower against the USD as Tuesday’s sessions came to an end. While Mortgage Approval beat expectations slightly, the Net Lending To Individuals numbers disappointed investors. Today the Manufacturing PMI will be released and its forecasted reading calls for an outcome of 57.1, which would below the previous month’s result. The Nationwide HPI is on the schedule for tomorrow and on Friday the Services PMI data will be brought forth. Thus, the U.K. will have three fairly steady days of economic data for investors to monitor and they will also have the overhang of the U.S. jobless numbers to take into account. Mixed data has been prevalent in the U.K. for months and the trading within the GBP has been transfixed by risk sentiment.

JPY & AUD

The JPY continues to hover near its highest values and its implication on the Japanese economy continues to spark concerns. While various government officials speak about possible intervention this has hardly scared away investors who seemingly continue to pile in. The AUD remains locked in a tight range and the outcome of the Australian election is still up in the air. The current results show a deadlock and these results have left many AUD investors at a standstill. Gold broke free of consolidation on Tuesday and climbed. The precious metal needs to be watched carefully in these nervous markets.