Any steam left in the U.S. economy?

• GE Import Price Index MoM/YoY (Jul) out at 0.6%/9.3% vs. 0.5%/9.2% expected.
• SW Manufacturing Confidence sa (Aug) out at -12 as expected.
• SW Consumer Confidence (Aug) out at -16.5 vs. -17.0 expected.
• SW Economic Tendency Survey (Aug) out at 85.5 vs. 89.0 prior.
• SW Household Lending YoY (Jul) out at 10.5% vs. 10.6% prior.
• NO Unemployment Rate (Jun) out at 2.6% vs. 2.5% expected.
• US Durable Goods Orders (Jul) out at 1.3% vs. 0.0% expected.
• US Durable Goods Orders Ex Transportation (Jul) out at 0.7% vs. -0.7% expected.
• GE Consumer Price Index MoM/YoY (Aug P) out at -0.3%/3.1% vs. -0.2%/3.2% exp.
• US DOE Crude Oil Inventories out at -117K vs. 1100K expected.
• AU Conference Board Leading Index (Jun) out at -0.5% vs. -0.1% prior.
• AU Private Capital Expenditure (2Q) out at 5.7% vs. 2.0% expected.

• Canadian 2Q Current Account (12:00)
• US 2Q GDP (12:30)
• US 2Q Personal Consumption (12:30)
• US 2Q Core PCE (12:30)
• US Aug 23 Initial Jobless Claims (12:30)
• US Aug 13 Continuing Claims (12:30)

Market Comments

As the slowdown experienced in the US as well as all credit problems that go hand in hand with previously overheated housing and mortgage businesses continue to make inroads to economies across both the Atlantic and Pacific divides, markets today are honed into the preliminary, annualized second quarter GDP release from the US. While the talk of an American recession has somewhat dissipated with the growth figures managing to remain on the positive territory since the beginning of the year, giving rise to a cautious optimism, this sense of optimism was further kindled with yesterday's upside surprise in the July durable goods order.  The median surveyed expectations for today's annualized growth rate points to 2.7%, which, while a modest growth percentage as such, is still robust enough to keep recession speculation at bay.

In an interview yesterday, ECB Council Member Axel Weber, known for his traditionally hawkish stance in inflation, reiterated the central bank's continued concern of price pressures, critically also stating that discussion on a possible interest-rate cut was premature at this stage. These comments signal that for the European bank, price pressures make for a bigger challenge than those faced on the growth arena and in part explain the pause in euro strength in EURUSD.

Similar euro-strength can also be observed in EURGBP, where the creeping euro has finally broken above the trend line resistance. We maintain a bullish bias for the pair as long as the 0.8020-0.8000 support zone holds, with the test and break of all-time highs around 0.8098 opening scope for further gains towards the 0.8130 -0.8170 zone.