Wednesday, May 27, 2015

Good data lift USD without lifting US rate expectations

•     Good data lift USD without lifting US rate expectations
–    US data largely beats expectations:  core durable goods orders rise, new home sales surged, house prices beat expectations, consumer sentiment rose.
–    Dallas Fed index misses expectations due to weak oil industry
–    Looks like Fed’s forecast of better US economy in Q2 is coming true! = USD-bullish
–    Dollar rises vs every currency we track. Commodity currencies big losers as oil falls

•     Nonetheless, markets in risk-off mood, possibly due to Greece
–    European stocks, US stock market lower; bond yields & Fed funds expectations fall

•     Oil falls on higher dollar, increased shale oil production in US
•     BoJ minutes show members confident of hitting inflation target
–    I don’t believe it; rates there have been below 0.5% since 1995 and still no inflation
–    It’ll probably be October before they give up and increase stimulus again

•     Today:
–    Eurozone: GE Gfk consumer confidence (June), FR consumer confidence (May)
–    Sweden:  economic tendency survey for May forecast to rise, could boost SEK
–    Canada: Bank of Canada rate decision. BoC expected to remain on hold; focus will be on tone of statement. We expect an upbeat comment that may strengthen CAD
–    Other:  1st day of three-day G7 finance ministers & central bank governors’ meeting

–    Speakers:  Richmond Fed President Lacker

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