Morning analysis 05/08/2015

Yesterday, we had a quiet European trading session with light data. Factory orders rose nearly as expected in June, up 1.8 percent for only the second gain in the last 11 months. The durable goods component initially released last week, is unrevised at plus 3.4 percent in again distorted by aircraft orders but one that does reflect a pop higher for capital goods. The non-durables component, data released with yesterdays report, rose 0.4 percent on order gains for oil and chemicals.

In the US session we saw extreme volatility as voting member of the Fed’s policy-setting committee Dennis Lockhart moved markets, he said to the wall street journal ‘’it would take a sharp turn for the worst in economic data to change his view in support of a rate hike after the mid-September meeting.’’ The euro fell sharply against dollar crashing through the 1.09 support level.

I will expect the dollar to be bid across the board today early in the European session as traders await the ADP figures which will give an insight into the eagerly awaited non-farms report on Friday. We also have US trade and the non-manufacturing PMI data.

IUSMNO_chart (1) us vv

Long term USD index chart if it breaks 98.00 the next target will be 100.00

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