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The strong US$ and the shallow industrial recession

By: New_Deal_democrat

The New York Fed is out with a research report estimating that a 10% appreciation in the US$ in a quarter leads to a cumulative loss in GDP over 2 years of -0.7%, most of which happens during the first year. http://libertystreeteconomics.newyorkfed.org/2015/07/the-effect-of-the-strong-dollar-on-us-growth.html#.Va5GHnD3arU Here's the summary chart: Of course, appreciation of the US$ doesn't happen in isolation, but the effect is significant enough that it can tip an otherwise soft economy into recession. As the below graph shows, the recent appreciation of the US$ was about 12% against all trading partners, and it took place over 3 quarters rather than one (red, left scale), but the decline in industrial production that began last November (blue, right scale) is in accord with the NY Fed's analysis: In addition to production, transportation of goods has been similarly affected. Read more

XE Market Analysis: North America - Jul 21, 2015

By: XE Market Analysis

The dollar corrected some during the European AM session, seeing EUR-USD rebound about 30 pips to the 1.0850 area and USD-JPY dip below 124.30. The greenback has seen losses of a similar magnitude against sterling and the Aussie dollar, among others. There were no fresh news drivers, and today's U.S. Read more

XE Market Analysis: Europe - Jul 21, 2015

By: XE Market Analysis

EUR-USD clocked at a new low at 1.0808 in early Asia-Pacific, and subsequently remained heavy, below 1.0835. Optimism about the Greek deal is starting to fade, and a Bloomberg survey yesterday showed respondents expecting Grexit concerns to return next year. Read more

XE Market Analysis: Asia - Jul 20, 2015

By: XE Market Analysis

The dollar was mixed in light N.Y. trade on Monday, posting marginal gains against the euro after rallying to 1.0870 on short covering. USD-JPY maintained a paper-thin range throughout, capped by last week and last month highs of 12438. USD-CAD tripped stops over 1.3000, before posting new 11-year highs over 1.3020. Read more

International Economic Preview For the Week of July 20-24

By: HaleStewart

Keep your eye on the following markets and economic events this week. The Chinese Stock Market After rising to the 5178 price level, the Chinese stock market has corrected a little over 22%. It is currently a bit above the 200 day EMA, which corresponds to the 50%-61.8% Fib level. Read more

XE Market Analysis: North America - Jul 20, 2015

By: XE Market Analysis

The dollar has started the new week where it finished of last week, in bullish form. EUR-USD fell to a 10-week low of 1.0820, stopping just short of the May-27 low at 1.0819. USD-JPY rose to a one-month peak of 124.38 during the London AM session following a quiet Asia session in the absence of Japanese markets, which were closed for a public holiday. Read more

XE Market Analysis: Europe - Jul 20, 2015

By: XE Market Analysis

The euro has started the new week under pressure (where it finished off last week), with EUR-USD logging a two-month low at 1.0820 and EUR-JPY a 10-day low at 134.35. The dollar, meanwhile, has remained generally underpinned, logging new cycle highs against gold and the Aussie dollar, though USD-JPY remained in a tight range in the low 124s, holding just below Friday's three-week peak at 124.23. Read more

US Equity and Economic Review For the Week of July 13-17; Earnings Season Begins, Edition

By: HaleStewart

Hale Stewart is a former bond broker who has been writing about economics and financial markets since 2006 on the Bonddad Blog. He is also a tax attorney with a domestic and international practice while also forming and managing captive insurance companies for US companies. Read more

Weekly Indicators: recent trends continue edition

By: New_Deal_democrat

Monthly data for June included blockbuster positive housing permits and starts, and positive industrial production and capacity utilization, but negative retail sales. Consumer and producer prices rose more than their recent average, while import and export prices declined. 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. Read more

XE Market Analysis: Asia - Jul 17, 2015

By: XE Market Analysis

With the exception of cable, the dollar was mostly firmer in N.Y. trade on Friday. In-line CPI data, and better housing starts numbers supported the greenback, though overall, trading ranges were relatively narrow. EUR-USD traded from 1.0895 highs at the open, to a low of 1.0842 at the London close, though follow through selling was tempered by Greece uncertainty. Read more

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