venerdì 14 febbraio 2014

Week In FX Americas – Weather Again Blamed For US Softening

This week, Ms. Yellen came spoke and did not disappoint anyone – handover from one Fed head to another completed. For the time being the US Fed game plan is to follow the “Bernanke way. However, some recent disappointing reports have a few analysts rethinking the depth of their bullishness for the US economy. On Thursday, US January retail sales slipped lower (-0.4%), m/m; well below expectations and adding insult was the December result being also revised into negative territory.

The headline print was the steepest one-month decline in 18-months for sales. Ex-autos, January sales were flat, while core-sales (ex-autos, gas and building materials) came in down -0.3%, having been expected up +0.2%. The reason for the slip: icy weather. The biggest burden on the report was sagging auto sales, which was abundantly clear in US January sales numbers out of the major auto manufacturers last week. Add the weather-impacted report to the miss in the January PMI manufacturing and the monthly job numbers, is reason enough to consider revising US growth rates. Many analysts are beginning to cut US Q4 and Q1 growth forecasts given the recent multitude of disappointing data – Q1 is tracking at +0.9% vs. +1.9% while Q4 is pared to +2.5% from +2.8%.

The US economy is the “beacon for capital markets.” However, the present global economic recovery has currently six “unusual” characteristics, which distinguishes it from recoveries of the past and is altering the strength of “the” recovery. This will obviously have a knock on effect on financial markets and monetary policies – indictors that need to be taken into consideration when looking at the “big” picture.

• Global trade continues to lag

• Credit is not picking up and continues to languish

• Long-term interest rates are not rallying – a flatter US yield curve

• Inflation is benign or continues to fall – Euro-zone is concerned about deflation

• Commodity prices remain on the “back-foot”

• Finally, when considering US employment, notice the participation rate – it continues to decline – not a good sign

One needs to be looking beyond weather to grasp a clearer picture. The lack of volatility in forex can be blamed on G10 monetary policy – with the lack of deviation in interest rates, central bank rhetoric is doing most of the currency price guidance for now.

U.S. Dollar Heading for Poor Week

Markets Warm to Canada’s Plan for 2015 Surplus

Fed’s Yellen Is a Structural Dove Unlike Bernanke

US Jobless Rose by 8K Above Forecast

US Retail Sales Falls in January

US Senate Votes To Avoid Debt Default

Fed’s Bullard: Fed will be cautious if changes to taper pace needed

US Senate Clears Debt-Limit Extension Bill

Feds Lacker Says New Laws Need for Too-Big-To-Fail Banks

U.S. House Agrees to Suspend Debt Ceiling

Mexican FinMin Says 5 Percent Growth Attainable

Yellen Says Market Far From Recovered Low Rates to Remain

Yellen Expected to Face Tough Questions

Yellen Says Fed To Keep Tapering

Gold Rises On Yellen’s Pledge To Continue Tapering

Lawmakers Plan To Raise Debt Limit With 12th Feb Vote

Canada: “Inevitable” That Keystone XL Pipeline Will Happen

Mexico Expected To Continually Grow 5% ‘For Decades’

WEEK AHEAD

* JPY Gross Domestic Product

* GBP Consumer Price Index

* EUR German ZEW Survey Economic Sentiment

* USD Consumer Price Index

* CAD Consumer Price Index

The post Week In FX Americas – Weather Again Blamed For US Softening appeared first on MarketPulse.