After a modest return to risk aversion yesterday following a disappointing Consumer Confidence report, it will be interesting to follow today whether or not this trend will continue. Several indicators due to be released today are likely to influence this sentiment along with the continuing release of the second quarter earning reports. These are important as they affect the stock markets. When stock markets are rising investors tend to buy higher yielding riskier currencies such as the Pound and EUR and sell the USD and JPY.
12:30 GMT USD – U.S Core Durable Goods Orders
– Change in the total value of new purchase orders for durable goods
– A leading indicator of production – consequently this is also an indicator of demand as more demand is followed by more production and therefore a good indicator of economic activity.
– Better than expected results are likely to push investors back to optimistic mood and put downward pressure on the Dollar
14:30 GMT Oil – U.S Crude Oil Inventories
– Change in the number of barrels of crude oil held in inventory by commercial firms during the past week
– Excess of inventory is a signal of poor demand therefore the lower the number the better it is for Oil prices, meanwhile a higher than expected number will put further downward pressure on Oil.
– Fewer inventories tend to signal increase in demand and encourage optimistic sentiment on the prospects of the global recovery – this in turn would mean higher demand for Oil resulting in higher prices.