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The dollar firmed marginally versus the European majors, and lost some ground to the yen in N.Y. trade on Thursday. Economic data wasn't overly constructive for sentiment, as jobless claims were higher than forecast, and construction spending missed the mark as well. Read more
This morning's personal income and spending report for March serve as a nice juxtaposition to yesterday's GDP report. One of the relationships I track is real retail sales vs. real PCE's. In virtually every business cycle since World War 2, retail sales started out stronger than PCE's, but then faded later on and continuing into the next recession. Read more
Cable logged fresh major-trend highs while and a 20 pip lift in EUR-USD was sufficient to yield a three-week high in thin trade. Many European nations are off for May-1 public holidays, and several Asia centres were also closed for business. Cable rallied to 1.6923 in the wake of stellar manufacturing PMI data out of the U.K., though this was offset by sub-expectations mortgage lending numbers and a particularly disappointing business lending decline, which will cause much chagrin for U.K. Read more
Narrow ranges prevailed in pre-Europe Asia trade, with a good number of centres closed amid Labour Day public holidays, as will be the case in Europe today. This left the dollar to consolidate the losses it saw after the U.S. GDP miss yesterday. The Fed didn't deliver any surprises after its FOMC meeting, announcing another $10 bln taper of QE purchases, to $45 bln while remarking that the economy is growing and will bounce back after a weather-related poor first quarter. Read more
The dollar got a modest bump up following the better ADP employment report, though gains quickly turned to losses after the near-zero GDP outcome. EUR-USD had been on the rise into the N.Y. open, and eventually made its way to 1.3876 highs, very close to highest levels seen earlier this week. Read more
Back in 2007, Prof. Edward Leamer of UCLA presented a paper at the Jackson Hole symposium called <a href="http://www.nber.org/papers/w13428">Housing IS the business cycle</a>. In it he pointed out that, on average, since World War 2, real residential fixed investment as a share of GDP has typically started to decline about 5 quarters before the onset of a recession, and served as the first warning of the downturn in the economy. So it is not a minor datapoint that in the first quarter of 2014, for the second quarter in a row, real residential fixed investment declined both as a share of GDP, and also absolutely. Here is a graph of real private fixed residential investment as a share of GDP: And here is a graph of the absolute value of private residential fixed investment: This is the second long leading indicator to roll over (interest rates on corporate bonds made a bottom in July 2012). Read more
Let's begin with this statement from Fed Chair Yellen on February 27 Read more
The euro rebounded from sub-1.38 lows, the yen saw some chop in the wake of the triple header BoJ policy announcement, outlook and press conference, while most other currencies held in comparatively narrow ranges. EUR-USD rebounded from a 1.3774 nadir, seen just ahead of the Eurozone CPI release, to the 1.3815-20 area. Read more
USD-JPY and yen crosses are lower after the BoJ announcement of unchanged policy, which disappointed some who had been expecting an expansion in the Y60-70 tln annual pace expansion of the monetary base, which in the event was left unchanged as the majority had anticipated. Read more
Yet another relatively quiet day in N.Y. FX trade on Tuesday, with the dollar mostly lower. The greenback rose modestly versus the euro and CHF, though lost ground to the yen, sterling and CAD. EUR-USD made an early move from 1.3860 to session lows near 1.3810 on stop loss selling, before turning sideways from 1.3810-20. Read more
