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The US dollar edged up in a week full with mixed signals. The difference from many previous gains was that this wasn’t a flight to safety run, but rather a general advance of the greenback across the board. US Housing data, the FOMC Meeting Minutes and Durable Goods Orders are the main events this week. Here is an outlook on the major events to shape forex trading.

Last week, The  Philly Fed Manufacturing Index partially rebounded from the sharp drop during June and July, reaching -7.1 points.    The recent drops suggest a contraction trend in the US manufacturing sector.  Meantime, the US Job market remained OK last week with a minor 2,000 increase in jobless claims to 366,000 remaining at low levels  indicating the job market is recovering. Europe is contracting and Finland discusses a euro exit again, but the hopes for a Spanish aid request followed by a blitz bond buying from the ECB is keeping the euro balanced.

  1. US Existing Home Sales: Wednesday, 14:00.US housing market slowed down in June amid a drop in existing home sales. The annual adjusted reading fell to 4.37 million from a revised 4.62 million in May. The slowdown probably occurred due to lower inventory, limiting buying opportunities. The market remains strong with solid demand and rising prices. An increase to 4.51million is expected this time.
  2. US FOMC Meeting Minutes: Wednesday, 18:00. No change was made in policy in the last meeting. Some observers saw this as lower chances for QE once again, while others saw the worrisome language as a sign that QE is coming in September, as some members want. The meeting minutes will provide a better picture of the balance within the committee.
  3. US Unemployment Claims: Thursday, 12:30.  Initial claims for U.S unemployment benefits increased mildly by 2,000 to 366,000 last week, within expectations, following a small upwardly revision to the previous week. The four week average reached 363,750, which is 5,500 claims lower than in the previous week, indicating fewer layoffs and improved market conditions. |A small decline to 365,000 is anticipated.
  4. US New Home Sales: Thursday, 14:00. New home sales plunged in June to the lowest level in more than a year reaching 350,000 after climbing to 382,000 annual sales in May. The low figures both in new home sales and in existing home sales reflect the current economic setback in the US economy, with a slowdown in job growth and manufacturing activity affecting potential buyers. However some analysts believe this is only a temporary relapse. A rise to 364,000 is expected now.
  5. UK Revised GDP: Friday, 8:30. The first revision of GDP  is likely to show a better outcome than the preliminary pessimistic reading of a 0.7% contraction. Economic growth in the second quarter is predicted to shrink by only 0.5% due to a smaller than estimated drop in construction activity and industrial production. The BOE also reduced its forecasts for economic growth  in the UK. The Olympics games are expected to contribute to UK’s economy however this is yet to be seen.
  6. US Core Durable Goods Orders: Friday, 12:30. Companies decreased their orders for long-lasting U.S. factory goods excluding transportation equipment on June, suggesting businesses are less confident in the economy. Orders declined 1.1% in June after a 0.8% gain in the previous month. The broad slowdown in the US economy together with the European debt crisis led to fewer orders which weigh on US economic growth prospects. A climb of 0.6% is expected this time.

*All times are GMT.

That’s it for the major events this week. Stay tuned for coverage on specific currencies

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