No More Easy Money?

30 June, 2017

On Thursday, the US Commerce Department released GDP (Annualized QoQ) showing a 1.4% annual rate compared to the 1.2% posted in the previous month. This slight increase shows that the US economy slowed less sharply in Q1 than expected, due to higher consumer spending and an increase in exports, which suggests a better growth outlook for the year. US Consumer spending rose to 1.1%, the weakest reading since Q2 of 2013 but almost double the 0.6% reported in May.
The underlying trend of a tightening labour market was reinforced by the latest US Labor Department report of the number of Americans filing for unemployment benefits last week rising slightly to 244K.

EUR surged to its highest in over a year on Thursday, whilst GBP, bond yields and global equities also climbed, as a plethora of hawkish comments from central bankers signaled the era of easy money might be coming to an end. EURUSD surged to as high as $1.1444 overnight, its strongest since May 2016. Currently EURUSD is trading around 1.1420. USD weakness against JPY continued with data showing Japanese core consumer prices rose 0.4% in May from a year earlier in its fifth straight month of gains, although inflation remains well below the central bank’s 2% target. USDJPY fell to 111.727 overnight, after losing 0.2 percent on Thursday. It was heading for a 1.2 percent gain for the month, but is down 4.2% this year. Currently USDJPY is trading just above 112.00.

Bank of England Chief Economist Haldane mirrored the comments made on Wednesday by BoE Governor Carney by stating “the BoE needs to look seriously at hiking rates”. These comments added to recent GBP strength pushing GBPUSD to 1.30292 in early trading today. This is the first time in 5 weeks that cable has been above 1.30 and close to its highest levels in 9 months. GBPUSD is currently trading around 1.3010.

Having slipped to a 10-month low last week Oil has rebounded more than 7% as a weekly decline in US production eased concerns of a deepening global over supply. WTI and Brent were both up over 0.5% on the day, touching highs of $45.42pb and $48.04pb respectively. In early trading WTI is currently trading around $45.34pb and Brent is currently trading around $47.92pb. Benefitting from USD weakness has seen Gold rise, hitting an early Friday high of $1,248.10 before retracing back to trade currently near $1,243.

U.S. inflation remains in focus today with the favorite Fed measure: the core PCE deflator. The markets are expecting the month-over-month number to ease to 0.1% for May and the annual rate slowing to 1.4%. Personal income and spending are also forecast to have grown more slowly than the 0.4% rise seen in April.


Source link  
Best currency rally heading for a crash

The analyst who most accurately predicted the ruble's rally in the second quarter is now its most pessimistic forecaster. The Bank of Russia's switch to...

Trade truce 2.0, or new currency wars?

Tensions around trade wars subsided following news reports that both the US and China leaders are set to hold an extended meeting...

Experts predict where crude could go

A top military aide to Iran's supreme leader warned over the weekend that The first bullet fired in the Persian Gulf will push oil prices above...


Morgan Stanley sees global recession

Investors are overlooking the threat posed by the U.S.-China trade war, which could send the global economy into recession in less than a year...

Oil at $100: how will it affect economy?

Brent crude has risen about 33 percent this year and is close to the highest in six months. While higher prices due to strong demand typically reflects...

Oil sector will lose 95% by 2050

Companies in the oil and gas sector, including large groups such as Shell, BP and Exxon, could lose 95% of their value by 2050 if governments...


The US economy recession by 2021

In a recent survey, most business economists believe the U.S. will fall into recession by 2021. Days after the market euphoria over a ceasefire in the...

Fed plans some further hikes

The U.S. Federal Reserve raised interest rates on Wednesday, as expected, but forecast fewer rate hikes next year and signaled its tightening cycle is nearing...

Pound to remain in Limbo

The British pound hit its lowest level in over 20 months yesterday before recovering in today's trading session on the back of a decision by British Prime...

  


Share it on:   or