Fed Sees No Major Problems in U.S. Economy
Today is a very important day for the financial traders from all over the world - Fed is to decide its interest rate policy until the next meeting (if not further). While almost 92% of all traders expected rate cut by 25 basis points - to 4.50% - the main intrigue was concealed in Fed's formulation and reasons for the cut (or its absence in case they would decide to leave things as they were). With one member voting against rate cut and words like "economic growth was solid in the third quarter" and that "some inflation risks remain", it is now almost certain that this was the last rate decrease until the end of 2007.
To much surprise of the majority of Forex traders, U.S. macroeconomics data came out very optimistically tuned today. Starting from GDP (advance) at 3.9% in third quarter, which appeared greater than 3.1% expected; ending with September construction spending which increased by 0.3% (against -0.2% fall in August and -0.4% expected for that month).
On the bad side of the reports are Chicago PMI with a decrease from 54.2 to 49.7 and a big surprise present for oil bulls - another major drawdown in U.S. commerce crude oil inventories by almost 3.9 million barrels.
Thursday, August 30, 2007U.S. Economy Slowing |
U.S. macro economical data releases get a little less overoptimistic while the sub prime lending crisis takes its toll and the carry trade is uncertain. This is the second week after a major carry trade crisis when the major indicators of carry trade, like GBP/JPY and EUR/JPY, are trading flat without any signs of the future for this type of financial trading. But worse U.S. economical indicators hint for some major change in the global financial kitchen.
Global domestic product for the second quarter of the 2007 showed a big increase compared to first quarter (which has been a big disappointment) but still 0.1% lower of 4.1% expected.
Initial jobless claims for the previous week came out to be 334,000. Not only it is 14k higher than experts have been expecting, but it is also a record high number since the April of this year. This may lead to the lower August non-farm payrolls report and higher unemployment rate for that month.
Friday, July 27, 2007EUR/USD Faces New Downfall And U.S. GDP Data Released |
EUR/USD dropped to its more than two weeks old minimum touching 1.3630 today while the market expected good data on GDP of United States for the seconds quarter of 2007. Breaking below 1.3230 for EUR/USD will mean a big trend breakout, but while it is traded higher a temporal correction should be considered.
U.S. GDP in Q2 2007 rose by 3.4% - a very good increase after 0.6% (revised from 0.7%) in Q1. It is also greater than expected number - 3.2%. Chain deflator for Q2 came out slightly lower than expected - 2.7% against 3.4% expected. Overall these are quite good results for the Q2. If U.S. economy can keep up with this pace in the second half of 2007, then it would add some more power to both stocks and Forex markets.
Today also Michigan Consumer Sentiment Index for July became available - 90.4 against 91.5 - lower than expected but still at a high level, showing a good sign for the U.S. economical health in general.
