U.S. Dollar Among Leaders Ahead of Consumer Confidence, Fed Minutes

The Greenback was one of the strongest performers in the overnight as a slew of mostly disappointing data from across the globe siphoned risk-appetite.

Fundamental Headlines

• Home Prices in U.S. Probably Fell in June – Bloomberg

• IASB Criticizes Greek Debt Writedowns – Financial Times

• Fed's Evans Favors Strong Policy Accommodation – Reuters

• Irene Costs Restart Washington Budget Battle – Reuters

• Europeans Appear Set to Pause Rate Rises – WSJ

European Session Summary

Markets priced in a typical day on Tuesday, returning to their historical correlations after haphazardly to start the week on Monday. Indeed, after numerous poor data releases out of Europe, European equity markets traded mostly lower, and U.S. stock indices' futures pointed to an open in the red.

Data disappointed market participants throughout the European session, as a Swiss consumption indicator fell below expectations, Italian retail sales declined more-than-expected, British consumer credit rose less-than-forecast, and Euro-zone economic confidence dropped to its lowest level since May 2010. As such, the markets saw risk-appetite mostly lower, although with the Swiss Franc dragged lower on the poor data coupled with continuing intervention concerns, and the New Zealand Dollar boosted by incredible housing data released ahead of the Asian session open, the FX Carry Trade Index was slightly higher, gaining 0.17 percent, at the time this report was written.

GBP/USD 5-minute Chart: August 30, 2011

Charts created using Strategy Trader– Prepared by Christopher Vecchio

The British Pound was the worst performing major currency on the day, following weak consumer credit expansion data from July, as noted earlier. The poor data suggests that lending conditions remain tight, and that the Bank of England's hand might be forced into introducing further stimulus measures in order to boost the economy. Accordingly, the British stock index stood out as one of the few winners in the European session thus far, with the Gilt, the British government 10-year Treasury Note equivalent, falling to its lowest level in three weeks.

Pre-North American Session Summary

In terms of data ahead of the North American trading session, data Canadian data sparked some price action, though barely enough to be considered market moving. Canada's current account deficit widened more-than-expected in the second quarter, as data today showed a C$15.3 billion deficit, versus C$13.7 billion forecasted, according to a Bloomberg News survey. Bank of Canada Governor Mark Carney noted last week that the Canadian economy, the world's eleventh largest economy, most likely stalled or even shrank in the second quarter. Tomorrow, the Canadian growth figure for the second quarter is released.

USD/CAD 1-minute Chart: August 30, 2011

Charts created using Strategy Trader– Prepared by Christopher Vecchio

Markets remained mostly quiet ahead of the North American session open, with the consumer confidence reading for the month of August due shortly after the open, and the minutes from the Federal Open Market Committee's most recent meeting expected to be released later in the day. Thus far, on Tuesday, the Dow Jones FXCM Dollar index traded higher, trading at 9436.53, at the time this report was written. The index remained above the session open at 9405.81, and was slightly lower than the session high at 9455.01.

24-Hour Price Action

Key Levels: 12:50 GMT

Written by Christopher Vecchio, Currency Analyst

To contact the author of this report, please send inquiries to: cvecchio@dailyfx.com

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