US Fundamental Report

U.S. Fundamental Report


Last Week’s U.S. Dollar Recap:

The Greenback had a mixed week against the other major currencies, losing significant ground against the NZD and CAD, falling a bit against Sterling and rising against both the Euro and Yen. The United States seems to be furthering its recovery somewhat, as was pointed out by U.S. Treasury Secretary Geithner after the G-20 meetings held last week in Washington D.C.

Another main issue discussed at the G-20 meeting involved a possible Chinese Yuan revaluation against the U.S. Dollar. The United States has been pushing for this revaluation lately, and the idea is now also receiving support from India, Brazil and European Union financial officials, as well as the IMF.

Nevertheless, the risk of rising inflation in the United States continues to persist. This fact was highlighted in Thursday’s PPI release which showed the headline number rose 0.7% month-on-month versus the market’s consensus for a 0.4% rise. Still, the core PPI number remained in line with the market at 0.1%. With respect to the U.S. housing market, Thursday’s Existing Home Sales also showed some improvement, coming in at 5.35M versus the 5.28M expected and the 5.01M reading seen the previous month. Friday’s New Home Sales number also improved, showing a 411K versus the 326K expected and the previous number of 324K that was revised up from 308K. With that said, house prices continued to fall last month as sellers became more realistic about the current level of prices and
mark their properties lower, as was shown by the House Price Index which fell 0.2% month-on-month. Friday’s Durable Goods Orders showed an impressive rise in the core number of
2.8%, versus the consensus of 0.7% and the previous 1.7% print that was revised upwards from an initial 0.9%. Nevertheless, this improvement was offset by the fall in non-core Durable Goods Orders of -1.3% versus the 0.2% rise expected, and the upward revision of 1.1% to the previous month versus its original 0.5% print.


This Week’s U.S. Outlook:

The U.S. economic calendar has another important week coming up after the biannual IMF Meeting in Washington D.C. concludes on Sunday. The U.S. data releases start on Tuesday with the S&P/CS Composite-20 HPI (1.4%Y/Y), CB Consumer Confidence (53.7), and testimony by Fed Chairman Bernanke in Washington D.C. before the National Commission on Fiscal Responsibility and Reform and the Richmond Manufacturing Index (7). On Wednesday, the key FOMC Statement and Fed Funds Rate announcement is expected to leave the rate unchanged at <0.25%. Thursday has Initial Jobless Claims (442K), while Friday features Advance GDP (3.4% and 0.9% Price Index Q/Q), the Employment Cost Index (0.6% Q/Q), Chicago PMI (60.0), Revised UofM Consumer Sentiment (71.2) and Revised UofM Inflation Expectations (last 2.9%). Saturday has a speech by FOMC Member Duke scheduled
in Philadelphia.