Spending is increasing by the second

25 November, 2016

Durable Goods order

The US Dollar navigates towards a new peak on Thursday, as robust growth of Durable Goods Orders in October signalled that the estimate of the economic expansion may be behind the actual pace.  The number of long-lasting expensive goods purchases in the US surged by 4.8%, from -0.3% decline in September, indicating that the Americans are willing to spend more and faster than event before. It is noteworthy that the gauge was inconsistent with the Consumer Confidence data, which pointed towards a decrease in future consumption (98.6 vs. 101.0 points consensus).

FOMC minutes

Another piece of economic data –  unemployment claims came mixed but close to analysts’ estimates and then were largely passed unnoticed. The focus was on Minutes data from FOMC November meeting, which showed an air of confidence among the policymakers in the prospects of an economic pickup in the US. The protocol confirmed the markets hopes about the FED preparing a monetary policy to tighten in December.  According to the protocol most members of the regulator were in favour to refrain from raising rates “at the current moment”, what correspond to the language of the Fed policy statement released November 2nd.

The European currency, Swiss Franc and Japanese Yen plunged against the US Dollar. The USD/JPY rose 0.55% to 113.15, USD/CHF trades 0.04% higher than Wednesday close. The Pound remains stable as Brexit risks are sidelined because the economic updates of the country contain no serious indications of a negative impact from Brexit.

Oil

Updates on crude reserves from EIA stirred some volatility, but it passed without major ramifications on the energy market. The US reserves shrunk data despite the growth projections. Oil continues to hold on to the green side posting minor gains as traders are trying to second-guess the outcome of OPECs plan to cut output. This has in turn troubled with the potential participation of Iran, Iraq and Russia. Moscow, which has been quite resilient to the headwinds in the form of low oil prices and hindered access to the international debt market, continues to play a dodgy game agreeing to freeze the output but avoids any talks on production cuts. Iraq has been asking several times to be exempted from production due to the war with jihadist while the agreement with Iran remains fragile.


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