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Loretta Mester is the president of the Cleveland Federal Reserve. While her speeches are normally more general in nature, her May y14 presentation to the Global Interdependence Center contains more detail, allowing us to better understand her more hawkish analysis of the U.S. Read more
This week, the markets received several key pieces of leading and coincidental data. Let’s start with 1-unit building permits, which has a bullish economic backdrop. The labor market is strong. While interest rates are increasing, the average 30-year mortgage is slightly below 4.6%; while high by recent standards, it’s low historically. Read more
April data included an increase in industrial production, capacity utilization, and both nominal and real retail sales. Both housing permits and starts declined slightly from their previous record pace for this expansion. Nevertheless the Index of Leading Indicators was positive. March business sales were up, and inventories were flat, so the ratio of the two improved. My usual note: I look at the high frequency weekly indicators because while they can be very noisy, they provide a good Now-cast of the economy, and will telegraph the maintenance or change in the economy well before monthly or quarterly data is available. Read more
The USD index (DXY) clocked a new five-month high, at 93.83, aided by a post-data surge in USD-CAD and continued buoyancy in USD-JPY, which earlier posted a four-month high at 111.08. Weaker than expected inflation data out of Japan has been underpinning the dollar against the yen. Read more
OVERVIEW The Greenback is closing on strongly for the fifth week in a row, 0.11% against the basket of major currencies. Turkish Lira and the South African Rand weakened to fresh lows as EM currencies continue to slump. West Texas Intermediate at $71.57 barrel, up 8 cents amidst geopolitical risks and supply tightening. HIGHLIGHT Emerging market currencies continue to suffer as we close on this week. Read more
EUR-USD ebbed back under 1.1800 as market participants cast a wary eye on political developments in Italy, though Wednesday's five-month low at 1.1763 remained untroubled. The 10-year U.S. T-note yield also touched a new seven-year high above 3.11%, before backing to around 3.10%. Read more
The yen have traded softer into the London interbank open, which saw USD-JPY touch 111.00 for the first time since January while concurrently lifting yen crosses. AUD-JPY, for instance, clocked a one-month high. A dip in Japanese inflation data weighed on the yen. Read more
FX trade was relatively quiet in N.Y. on Thursday, keeping the DXY inside a 93.38 to 93.56 trading range, and the major dollar pairings range bound. EUR-USD ranged between 1.1785 and 1.1812, while USD-JPY topped at new trend highs of 110.86 before slipping back to 110.63 lows. Read more
EUR-USD turned back under 1.1800 after rebound gains stalled at 1.1837. The political evolutions in Italy have continued to see Italian yields rise, and with them other peripheral Eurozone sovereign yields while safe-haven demand for German paper has suppressed Bund yields, which in turn has been weighing on the euro. Read more
