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A six-month low in China official PMI helped to maintain a risk-off theme, though movement among the main currencies has mostly been fairly limited. A six-week low in EUR-CHF of 1.2210 was the most telling FX development as the safe haven Swiss franc rose. Read more
In the rear view mirror, GdP for the 4th quarter of 2013 increased 3.2%. Median wages rose. In monthly news for December, new home sales and pending home sales declined sharply, and were negative YoY. The private residential investment component of 4th quarter GDP also declined sharply. Read more
Last week was a very busy week for economic news. Let’s start with the US, where the biggest news was the growth rate of 4th quarter GDP. The BEA reported: Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.2 percent in the fourth quarter of 2013 (that is, from the third quarter to the fourth quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. Read more
The dollar moved higher versus the euro in morning trade, despite mixed U.S. data readings, and melting down stocks. Softer EU inflation data prompted ECB rate cut talks (as soon as next week), which resulted in EUR-USD falling from session highs over 1.3570 to lows of 1.3480. Read more
Above is a chart for the EUR/USD. For the last half of 2013 the euro rallied as EU news tended to be more bullish relative to US news. But since that time, we've seen a turn of events towards the US. First, the last two quarters of US economic growth have been over 3%. Read more
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The EUR came under some pressure after the weaker than expected inflation number added to speculation of a rate cut by the ECB next week. Eurozone Jan HICP inflation unexpectedly fell to 0.7% y/y from 0.8% y/y in December. The Euro is also slightly weaker against the CHF and heading for its biggest monthly decline since March and the first loss since August against the USD, amid speculation of further easing measures. Read more
In the past I've noted that <a href="http://bonddad.blogspot.com/2012/03/consumer-spending-pattern-does-not.html">comparing the performance of</a> personal consumption expenditures and real retail sales is a good way to see where we are in the economic cycle. Below is a graph comparing the two by subtracting YoY PCE growth from YoY real retail sales growth, through 1997. Read more
The EUR came under some pressure after the weaker than expected inflation number added to speculation of a rate cut by the ECB next week. Eurozone Jan HICP inflation unexpectedly fell to 0.7% y/y from 0.8% y/y in December. The Euro is also slightly weaker against the CHF and heading for its biggest monthly decline since March and the first loss since August against the USD, amid speculation of further easing measures. Read more
The Fed did not surprise, as it tapered another $10 bln from its asset purchase program. The dollar had been on the rise early in N.Y. trade on Wednesday, though as equities melted down, along with Treasury yields, the greenback moved mostly lower. The Fed made no mention of emerging markets in its statement, though with some linking current EM woes to the Fed's slow retreat, emerging currencies will be watched closely.[EUR, USD]More consolidation may be in store for EUR-USD, as the 1.3600-1.3700 band continued to hold up. Read more
The USD weakened against most currencies after the Fed cut monthly bond purchases by another $ 10 bln as expected. The move counterbalanced attempts in South Africa and Turkey to boost their currencies though rate hikes and rekindled save haven demand. Read more
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