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US data showing signs of stress? – Investec

FXStreet (Barcelona) - The Investec Research Team notes that after an encouraging upward revision to 3Q14 US GDP on Tuesday, Wednesday’s data undermines the optimistic interpretation.

Key Quotes

“Wednesday’s batch of US data was not particularly reassuring, and put some doubt on the positive message delivered by the previous day’s upward GDP revisions.”

“October durable goods orders, for which the key focus is the core goods orders exdefence and ex-aircraft, dipped 1.3% MoM, taking the three-month annualised trend down from 11.2% in September, to only 2.7% in October.”
“Core capital goods shipments also declined, though not as much. These two categories usually give a rough approximation to quarterly business investment in equipment and software published in the GDP data. This is therefore a weak start to the fourth quarter.”

“Adding to a weak set of orders data, the latest weekly initial jobless claims figure spiked higher too, rising from 292K to 313K, and confirming that the last month has seen a reversal in the recent downtrend. Our suspicion is that this will be short-lived. We will need to see claims data dip sharply down in the coming weeks if we are not to begin to doubt the resilience of the recovery in the labour market.”

“Personal income and spending data were also disappointing, which also raises doubts about 4Q14 GDP (was already looking challenged) though there were some upwards revisions to the spending numbers that soften the blow a little.”

“These data may well explain why consumer confidence data took an unexpected dive in November, though there may also be some distortion showing through from the recent Mid-term elections. Expectations of Fed tightening next year will doubtless be trimmed in the light of this data, sapping some support for the USD.”

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