The Economy in the US continues to worry - Foreign Exchange
Posted by Darren Hutchinson on Thu, Aug 26, 2010 @ 05:33 AM
If the markets were a boxing match, the US economy would be seeing stars and cartoon birds flying round its head as economic blow after economic blow rains down on its unprotected body. The referee is thinking about calling the fight off and the bookies are no longer taking bets. It’s over.
US data releases missing estimates are now the norm unfortunately.
Yesterday’s durable goods orders slumped to 0.3% vs. and expected 3.0%. Most of this was down to a whopping 75.9% increase in airline orders as Boeing is said to have done good business at the summer air shows. Unfortunately these planes take around 2 years to build and that’s if the buyer doesn’t cancel them like has happened before.
We knew that existing home sales had shot lower the day previous so it was with a feeling of déjà vu that we saw new home sales fall to a record low. Despite this the US dollar managed to stay relatively weak against GBP and EUR. Equity markets also dipped lower with the Dow Jones trading once again below the key 10,000 level before completely reversing and actually finishing positive for the day.
Overnight this has buoyed risky assets in Asia and Australia with the Nikkei 225 0.69% higher and the ASX in Sydney up 0.83%. The movement into risky assets has allowed the yen to slacken away from its 15 year highs against the US dollar ahead of the Federal Reserve symposium due on Friday.
The pound was quiet yesterday although it did fall slightly against the EUR as German IFO showed an increase in business confidence against expectations. This is a direct result of the 2.2% GDP release that we saw towards the end of last week in Germany and the belief that this growth can continue.
Following on from that German business confidence measure, we have seen consumer confidence also rise in the industrial heart of the EU; GFK consumer confidence rising to 4.1 from an expected 4.0. We also have EU M3 money supply at 09.00 and US initial jobless claims at 13.30
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