Economic Conditions

  • Japan's Ministry of Finance has news and the U.S. releases revised GDP.

    A Light Data Day Still Contains some Nuggets

    The holiday shutters most markets today.  Several Asian markets were open, and equities were narrowly mixed, with Japan and China posting small gains.  Most of the other local markets, including Australia, Korea and Taiwan slipped.

    The US dollar is trading with a firmer bias, but mostly, as one would expect, within yesterday's ranges.    Three observations are worth sharing.

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  • The dollar is recouping losses on Fed speak regarding further rate hikes.

    Fed Officials Give the Dollar a Boost

    The US dollar is firm as the losses suffered in the wake of the FOMC meeting are retraced.  Over the last few days, no less than five Federal Reserve officials have come out endorsing a resumption of the normalization cycle.  In addition, no fewer than three regional Fed manufacturing surveys have shown greater strength than expected, with gains in forward-looking new orders. 

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  • The terror attacks in Brussels cast a pall over the markets.

    Markets Stabilize after the Brussels Attacks

    A series of attacks at Brussels airport and metro casts a pall over the market.  The attacks come as Europe prepares what for many will be a long holiday weekend.  Gold, the dollar and yen seem to have been the beneficiaries.   Bonds are generally firmer and equities lower.  However, in late morning activity in London, the markets began stabilizing.

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  • Happiness is challenging traditional measures like GDP.

    If You're Happy and You Know It, Ditch Your GDP

    Denmark reclaimed its place as the happiest country in the world, according to the latest annual World Happiness Report. Switzerland, Iceland, Norway and Finland followed in quick succession at the top, while Benin, Afghanistan, Togo, Syria and Burundi languished at the bottom.

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  • Smith's resignation in the U.K. further fractures the leadership.

    Ian Duncan Smith is Out, Pressuring Cameron and the Pound

    The US dollar is beginning the week mostly firmer against the major and emerging market currencies.  The Japanese yen, where local markets were closed for the spring equinox is up slightly, and the Australian dollar turned higher in the European session. 

    However, sterling has remained under pressure from the start.  Ian Duncan Smith's resignation ostensibly over cuts in disability spending is seen as another front in the Brexit debate that has split the cabinet and the Tory Party. 

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  • The market year started horribly, but it seems to have found its stride.

    Thank Goodness for the Second Half of the First Quarter

    The year started poorly, to say the least. Equity markets plunged from the get-go.  The Nikkei, DAX and S&P 500 gapped lower on the first trading day of the year.  Emerging markets and commodities were smashed. 

    Many economists blamed the Federal Reserve for hiking rates in mid-December.  Pundits warned that the seven-year bull market and weak economic recovery in the US was ending.  A recession loomed and worse because monetary policy had lost its effectiveness and fiscal policy was political neutered. 

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  • Technical indicators point to dollar weakness, but it's relative.

    Additional Dollar Weakness Would Not Surprise

    The US dollar had a difficult week.  The price action after the ECB meeting had undermined the technical tone, and the dollar took another leg down after the FOMC moved closer to the market expectation by reducing the number of rate hikes the median official thinks would be appropriate this year from four to two.

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  • Foreign share buying weakened the dollar, but the buying has tapered.

    After a Weak Week, the Dollar Regains Some Ground

    The US dollar is firmer against most major and emerging market currencies to pare this week's decline.  There are three notable exceptions, and they are all in Asia.  For all practical purposes, the dollar is flat against the Japanese yen near JPY111.30. 

    The South Korean won is up almost 1% to extend this week's pace setting the gain to 2.65%.  The dollar has fallen 7.2% against the won since it peaked at the end of last month.  The Taiwanese dollar is 0.6% higher, which essentially doubles this week's gains.

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  • The Fed reduced likely rate hikes in half and investors have to adjust.

    Market Participants Gauge the Fed's Cautiousness

    The Federal Reserve's cautiousness has sent the dollar reeling.  The Fed's backtracking to two hikes this year from four is still met with skepticism by the market.  It previously had a June hike nearly discounted but it has not pushed that out until September. 

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  • Apparently, a weaker dollar and stronger stocks come from fewer rate hikes.

    Fewer Rate Hikes, Lower Dollar, Higher Stocks

    The Federal Reserve halved the number of rate hikes it anticipates this year from four to two.  The market has been moving toward this as well after having thought there would be no hikes this year.  The dollar sold off.  The dollar-bloc currencies and emerging market currencies are have rallied sharply. Risk assets in general like the idea of a less hawkish Federal Reserve. 

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