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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
Right now, the greatest threat faced by the EU is deflation -- a continued and persistent decline in prices that slows economic activity. The following three charts highlight the increasing potential of deflation in the EU area. Read more
EUR-USD was knocked off highs by an unexpected drop in Eurozone M3 money supply data, which was followed by below-forecast ESI economic sentiment. The pair had earlier been bid and had matched Monday's high at 1.3879 before the data took the euro down a peg, to the 1.3855 area. Read more
AUD weakness was seen in quiet trade, with Japanese markets closed for the Showa Day holiday. China's efforts to crack down on financing in the iron ore import market is continuing to have a detrimental impact on the prices of the commodity, which forms a big chunk of Australia's export. Read more
Range trade was again the rule in N.Y. trade on Monday, with narrow and familiar bands in play for most of the major dollar pairings. EUR-USD managed to post two-week highs near 1.3880 in London, though was stuck inside of 1.3874-40 through the session. Read more
