Forex Flash: Difficult to discern signal in today's price action - BBH
FXstreet.com (Córdoba) - There are a number of conflicting forces that are obscuring whatever signal the market is generating, according to Marc Chandler, analyst at Brown Brothers Harriman.
"The US dollar has firmed in the European afternoon/NY morning. This would seem to be consistent with the risk off following the poor US data that included the third consecutive sub-50 reading on the manufacturing ISM, something that has not taken place since May-July 2009", the analyst explains. "At the same time the US reported an unexpected and sharp decline in construction spending (-0.9% vs expectations of a 0.4% rise)".
"Yet if the poor data increases the risk of new asset purchases from the FOMC next week, it does not appear to be reflected in the Treasury market, where, if anything, yields are slightly firmer, which is all the more unusual given the slide in equity prices today", the analyst adds.
"The US dollar has firmed in the European afternoon/NY morning. This would seem to be consistent with the risk off following the poor US data that included the third consecutive sub-50 reading on the manufacturing ISM, something that has not taken place since May-July 2009", the analyst explains. "At the same time the US reported an unexpected and sharp decline in construction spending (-0.9% vs expectations of a 0.4% rise)".
"Yet if the poor data increases the risk of new asset purchases from the FOMC next week, it does not appear to be reflected in the Treasury market, where, if anything, yields are slightly firmer, which is all the more unusual given the slide in equity prices today", the analyst adds.
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