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Weak US Data Sends Risk FX Lower

Last updated 12/23/2011 9:10 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

US economic data printed weaker than expected prompting a selloff in risk FX at the start of North American on the final day of trade before a long holiday weekend. US Durable Goods rose by 3.8% versus 2.2% eyed on a headline basis but demand for business equipment ex-transport and military spending actually declined by -1.2% the biggest drop since the start of this year.

US Personal Income/Spending figures also disappointed investors with income rising a measly 0.1% versus projections of 0.25 rise and spending increasing by a very timid 0.1% versus 0.3% forecast. The news suggests that Retail Sales in the key Christmas season may not be as robust as analysts had hoped lowering GDP estimates for Q4 of this year.Overall the data indicates that US economy continues to expand albeit at a glacial pace as the consumer remains cautious amidst challenging labor market conditions and lackluster business demand.

Risk currencies sold off in response to the data with EUR/USD returning to the 1.3050 level after hitting highs of 1.3095 in overnight Asian and European trade. With most market participants leaving early for the holiday weekend trading may soon slow to a crawl but in the meantime FX is likely to take directional cue from equities. As we noted earlier, “The key determining factor may be whether market participants will want to hold risk through the long holiday weekend.” If equities are unable to hold their gains EUR/USD may make a run for the 1.3000 figure as the day comes to a close.

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.