End of day howl!

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United States

  1. The ISM manufacturing report surprised to the upside as the nation’s factory activity accelerated last month (PMI > 50 = expansion).

  2. Manufacturing orders are growing at the fastest pace since 2004. The spike in new orders points to further gains in manufacturing output.

  3. Manufacturers are reporting that their customers’ inventories are much too low.

  4. Factory hiring is still lagging

  5. Permanent layoffs have been relatively low. But Americans are quite concerned about losing their job.

  6. The BLS measure of wage gains has been elevated because companies disproportionally shed low-wage jobs, boosting the average.

  7. Small business employment is not recovering.

  8. Despite a spike in housing demand, construction spending remains soft. Both residential and non-residential expenditures are below last year’s levels.

  9. Spending on factory construction is down 10% from a year ago. Office construction spending has declined by most since 2011.

  10. Auto sales have rebounded sharply. We can see this demand for autos in consumer spending on durables. However, auto sales to businesses are lagging.

  11. US imports from China are picking up, boosting freight rates.


  1. Manufacturing activity is now firmly in growth mode.

  2. Government support more than offset the loss of household income.

United Kingdom

  1. Mortgage approvals topped economists’ forecasts, returning to pre-crisis levels.

  2. The broad money supply growth is the highest in a decade.

  3. The Eat Out to Help Out program has been highly beneficial for the UK’s restaurant businesses.

  4. A majority of Scottish residents now support independence from the UK (mostly due to Brexit).


  1. Inflation at the Eurozone level surprised to the downside, with the headline CPI moving into negative territory.

  2. At least for now, the spike in the ECB’s balance sheet has not been effective in boosting inflation. Perhaps it helped avoid Japan-style deflationary pressures. The core CPI hit a new low. Vacation packages, which tend to be volatile, have been a drag on the core CPI. However, other factors have also contributed to the recent decline like housing, transportation, services.

  3. Inflation expectations point to a modest rebound.

  4. Germany’s unemployment declined for the second month.

  5. The unemployment rate surprised to the upside in Italy. Manufacturing activity has accelerated. Car registrations are back to pre-crisis levels. The budget gap has widened sharply this year.

  6. Spain’s manufacturing growth has stalled again. The euro-area PMI measure points to a rebound in factory output.

  7. The euro failed to break the resistance at 1.2.

Asia – Pacific

  1. The Bank of Japan has stepped up its ETF purchases just as overseas investors retreated.

  2. Abenomics was helpful for Japan’s corporate earnings.

  3. For the first time in almost two decades, Australia is officially in recession.


  1. Bond defaults may hit a record high this year.

  2. China’s dollar bond issuers have been bypassing US investors. Who needs all that regulation?

  3. China has been shedding US assets.

  4. State banks have been lending below the prime rate to support the economy.

  5. Mainland shares are trading at a substantial premium to Hong Kong.

  6. Hong Kong retail sales are gradually recovering

Emerging Markets

  1. The divergence between Brazil and Mexico is remarkablein PMIs

  2. Chile’s economic activity remained weak in July.

  3. South Africa’s vehicle sales remain soft.

  4. Thailand generates higher exports for travel services relative to neighboring countries.

  5. Foreign direct investment in Vietnam nearly doubled from 2010 to 2019.

  6. Vietnamese equities could begin to outperform the rest of the world (ex-US).

  7. India’s Q2 GDP decline stands out.

  8. Credit default swap spreads on EM dollar-denominated debt are the lowest in a year.


  1. Bitcoin is testing resistance at $12k.

  2. BTC/USD appears to be overbought but remains above its 200-day moving average.

  3. Bitcoin has traded in the narrowest volatility range since late 2015, which occurred before a strong breakout.


  1. US wheat futues are soaring.


  1. Global refinery margins remain weak.

  2. US fracking businesses continue to face challenges.

  3. Asia leads in renewable-energy capacity.


  1. Individual investors have become more influential, pushing their favorite stocks to new highs.

  2. Investors are paying a high premium for risky stocks

  3. The least profitable US stocks have significantly outperformed the most profitable companies when weighted equally.

  4. Recovering bear market losses have historically required remaining invested for about 1,100 trading days. This year’s recovery has been much swifter.

  5. The S&P 500 dividend yield continues to plunge. It will be difficult to justify this trend if Treasury yields back up.

  6. The correlation between the S&P 500 and the cumulative advance-decline line has broken down.

  7. Valuation matters most for long-term stock returns, according to BofA.

  8. By the way, US stocks are trading at the highest valuation premium to European stocks since the 90s.

  9. The volatility market is pricing in substantial election risks.

  10. Single-stock options with short maturities are extremely popular.

  11. Movie theater stocks have been outperforming.


  1. Investment-grade bonds have underperformed over the past few weeks as Treasury yields rose.

  2. Will investment-grade bond yields continue to trend down as the Fed holds the “lower for longer” pattern?

  3. Real short-term corporate bond yields turned negative.

  4. BofA’s wealth management clients have been cutting their bond allocations.


  1. Various indicators continue to signal higher bond yields (ISM, copper)

  2. The supply of both Treasuries and reserves rose to unprecedented levels this year.

  3. Food for Thought

  4. Homebuyers targeting suburbs and small towns

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