Intraday Market Thoughts

US Economy Beginning to Shine

by Adam Button
Feb 26, 2013 23:54

An upbeat round of US economic data overshadowed the Fed Chairman on Tuesday. The US dollar was the best performer while the commodity bloc lagged. Early Asia-Pacific trading featured New Zealand trade balance and Japanese retail sales are up next.   We issued new trades on EURJPY, AUDJPY, CADJPY, EURGBP, gold, silver and US crude in addition to 2 new charts in EURJPY as well as the existing trades from Monday night and last week. See latest Premium Insights

The US economy flashed more signs that it will lead developed market growth in the year ahead. New home sales soared to a post-crisis high at 437K compared to 380K expected and prices rose around 7% according to separate government and private surveys. In addition, consumer confidence jumped to 69.6 compared to 62.0 expected and the Richmond Fed rose to +6 compared to the -4 consensus.

After the strong round of economic data, a comment about tapering QE from Bernanke could have led to a broad US dollar rally but the Chairman remained dovish. The lone slight hit about less easing was that the benefits of easing outweigh the costs 'at this point'.

It's was a fleeting suggestion that less easing will come at a future point but, combined with the data, was enough to spark a brief USD rally – particularly against the commodity currencies. AUD and CAD both hit multi-month lows immediately afterwards.

The New Zealand dollar was particularly hard hit on the unwinding carry trade. Soft NZ trade figures confirmed the negative tone as the January deficit was $305m compared to a $125m surplus expected. Finance Minister English speaks at 2300 GMT.

Shortly afterward, at 2350 GMT, Japan will release retail sales numbers for January. The consensus estimate is for a 0.9% rise as the economy shows continued signs of life early in Q1.

Act Exp Prev GMT
Trade Balance
-305M 113M 534M Feb 26 21:45
Retail Sales (y/y)
-1.1% -1.4% 0.3% Feb 26 23:50
New Home Sales
437K 381K 378K Feb 26 15:00
Pending Home Sales (JAN) (m/m)
1.6% -4.3% Feb 27 15:00
Pending Home Sales (JAN) (y/y)
6.9% Feb 27 15:00
Fed's Bernanke testifies
Feb 27 15:00
Fed's Richard Fisher's speech
Feb 27 21:30
CB Consumer Confidence
69.6 60.8 58.4 Feb 26 15:00
Richmond Manufacturing Index
6 -4 -12 Feb 26 15:00

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