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, Sometimes it's important to take a long view to better understand current market developments. Case in point: above is a monthly chart of the pound/yen. The yen rose from the end of the recession until the Bank of Japan announced its massive quantatative easing program last year. Read more
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In the rear view mirror, 3rd quarter GDP was revised up to a strong +4.1%. Productivity was up; unit labor costs were down (which I take as a negative). Leading Economic Indicators for November were up sharply, suggesting good growth will continue through the first half of 2014. Read more
The biggest news last week was the Federal Reserve's announcement that they would start the tapering process. Here is the exact wording from their press release: Beginning in January, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $35 billion per month rather than $40 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $40 billion per month rather than $45 billion per month. Read more
The dollar pulled back some in N.Y. trade on Friday, as pre-weekend and pre-Christmas week profit taking set in. EUR-USD briefly breached the 1.3700 mark, though was unable to hold the handle, closing near 1.3670. USD-JPY meanwhile, edged under 104 for a short while, before reclaiming it into the close. Read more
EUR-USD logged a new two-week low to 1.3625 during Asian trade after breaching yesterday's 1.3651 low and triggering stop orders. The pair subsequently traded moderately higher during the European session, aided by solid German confidence data. The new low reflected a general bid tone in the USD, though the breadth of is gain seemed to shrink. Read more
The USD extended to fresh post-taper highs before settling lower. The BoJ maintained monetary policy unchanged, reaffirming its commitment to expand the monetary base by an annual 60-70 tln yen, as was widely expected and to little impact, though USD-JPY appeared to acknowledge the contrasting BoJ versus Fed stances with a rally to a fresh major-trend peak of 104.59. Read more
The dollar was mixed in N.Y. trade on Thursday, though was in a relatively narrow range overall. The USD index held the bulk of post-FOMC gains, as the greenback perked up some against the euro. USD-JPY was steady over 104.00, while USD-CAD faded after posting multi-year highs over 1.0700. Read more
In my previous year-end column, I looked at the big economic stories for 2013. Today, I want to take a look into 2014 to see what might be in store economically. So, here are what could be the big economic developments coming down the pike in 2014. Will the EU return to growth? Starting with the Greek crisis, continuing with the Cyprus default and following through over the negative GDP growth between mid-2012 and 2013, the EU has had a terrible three years. Read more
The dollar consolidated in subdued trade following the across-the-board gain it saw following the Fed's decision to commence QE tapering. USD-JPY dipped to a correction low of 103.88 in Tokyo, down nearly 50 pips from the post-Fed major trend high of 104.36, before settling around 104.00. Read more
One disagrees with Bill McBride a/k/a Calculated Risk a/k/a The Nicest Blogger On The Internet at one's peril, especially when it comes to housing, but that is what I am about to do. Bill (link: http://www.calculatedriskblog.com/2013/12/update-looking-for-stronger-economic.html) has written that he is looking for stronger economic growth in 2014 in part because he expects that "the housing recovery should continue." Unless the interest rate spike that began in April 2013 abates, I disagree that the housing recovery will continue, and that will have a negative effect on growth rates by the end of 2014. Below I have plotted the YoY changes in housing permits vs. Read more
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