Data on the
US industrial production fell more than expected in April. The industrial data
shows that in spite of a string of good news pointing towards a recovery in the
US economy, the overall picture is not uniformly strong. The industrial data,
the weakest in ten months, immediately had a negative effect on the dollar
index, DXY, which dropped 0,1 %. The dollar is nevertheless extremely
strong. EUR/USD trades at 1.2867 near a
6 week low. USD/JPY is steady at
1.0224.
The
disappointing industrial production added to the buzzing debate on when the
Federal Reserve (FED) will eventually start winding down its asset purchasing
program tantamount to printing money. Positive news, as increased employment
and retail sales have pointed towards an end to quantitative easing within the
year. However, The industrial data fuels arguments for continued easing. Citing
this, FED chairman Ben Bernanke’s speech over the coming weekend will certainly
be watched intently.
The
industrial data represented a limited setback for the dollar which, this month
alone, has gained 3,8 % against “safe haven” currencies such as the Swiss Franc
and the Yen. The Australian dollar has lost 4,5 %. Since the beginning of the
year the USD has jumped 17,8 percent towards the Yen. Most analysts believe
that the dollar shall continue to be strong, with the yen subsequently
weakening. Some forecasts indicate USD/JPY at 124 at the year’s end.
The EUR/USD
fell as deep as 1.2642 on Wednesday following presentation of the French GDP
numbers, clearly indicating that France has slipped into recession. The rate of
Germany’s robust economic growth is not sufficient to prevent the euro zone
from contracting for the sixth quarter in a row. If the ECB follows up indications
to lower its interest below zero (if the economy slows further), then the euro will probably suffer a broad
sell-off. With the Cyprus crisis still fresh in mind, investors will, most
likely, park their deposits outside of Europe.
Japan’s GDP
rose 0,9 % in the first quarter of 2013, expanding at its quickest pace in a
year. Increased private consumption, and a steady rise in exports are seen as
the first results of Prime Minister Shinzo Abe’s aggressive stimulus policies.
The economy is also picking up in India where forecasts point to an increase in
GDP on 5,5 – 6 %.
No comments:
Post a Comment