Economic news:
13 Dec
Moody's comment that the tax cut extension, if approved, would be negative to US's Aaa credit rating as it will "adversely affect" the budget deficit unless there are "offsetting measures". Moody's noted that "the negative effects on government finance are likely to outweigh the positive effects of higher economic growth."
14 Dec
13:30 GMT
US retail sales rose 0.8% in November versus consensus of 0.6%. Ex--auto sales rose impressively by 1.2% versus expectation of 0.7%. Headline PPI moderated less than expected to 3.5% yoy in November while core PPI dropped to 1.2% yoy, inline with expectation.
19:15 GMT
FOMC left rates unchanged at 0-0.25% target range as widely expected. In addition, Fed maintained the $600b longer-term treasury securities purchase program unchanged to "promote a stronger pace" of economic recovery. The plan will be carried out at a pace of about $75b per month. Also, Fed will maintain the existing policy of reinvesting principal payments from its securities holdings.
Dec 15
9:30 GMT
Uk’s ILO unemployment rate unexpectedly jumped from 7.7% to 7.9% in October. Unemployment rose by 35,000 in the three months to October and crossed the 2.5m mark.
13:30 GMT
US Data-CPI moderated to 1.1% yoy in November as expected. But core CPI accelerated from 0.6% yoy to 0.8% yoy. Empire state manufacturing index improved strongly to 10.57 in December. Industrial production rose 0.4% in November. TIC capital inflow dropped sharply to $27.6b in October. NAHB housing market index was unchanged at 16 in December.
Dec 16
09:38 GMT
UK November Retail Sales +0.3% M/M, +1.1% Y/Y, Compared to median forecasts of +0.4%, +0.7% respectively.
With the start of next year, consumer spending will fall drastically, affected by the rise in oil prices, elevated unemployment, higher VAT rates, and spending cuts along with other challenges that continue to suffocate household spending.
13:30 GMT
US initial jobless claims edged to 420K the week ended Dec 11, despite expectations for the figure to rise slightly from 423K to 425K. Continuing claims on the other hand rose slightly to 4135K over the week, compared to 4113K at last reading.
The US current account deficit increased to $127.23B over the 3rd quarter, compared to the revised $123.21B over the last quarter. The jump was more than the $126.00B most analysts were expecting.
US housing starts for NOV at 555k vs 550k expected; prior month's figure revised up to 534k from 519k.
15:0 GMT
US Philadelphia Fed Index rose to 24.3 in Dec from 22, the highest level since April 2005. Market consensus was looking for a decline to 15.0. Within the breakdown, new orders were up 14.6 from 10.4, average work week increased to 19.3 from 10.9 and delivery time rose to 8.5 from 2.1. Slightly softer though was shipments (7.3 from 16.8) and number of employees (5.1 from 13.3).
00:32 GMT
The proposed austerity measures are having an effect and the latest UK’s Nationwide consumer confidence level has fallen to an 18-month low. Nationwide consumer confidence (Nov) 45 versus 52 expected and 52 in the prior period. This is the fourth consecutive month the confidence index has decreased in UK and it is at its lowest value since March 2009.
11:00 GMT
London Fix: EURO and GBP came under some concerted pressure as talk circulated of sell interest lined up for the 11:00 fix.
Euro-zone trade balance (Oct) comes in at 5.2b beating expectations of 2.5b.
15:01 GMT
Leading indicators in the US rose in line with analysts’ expectations to 1.1% over November, compared to the downwardly revised 0.4% the month prior.This is the largest gain since March with the index at a record high.
Comments;
Developments in the US economy this week were generally better than expected and served to underpin the view that signs of improved economic growth in US continue to spring forth and simultaneously diminishing the credibility of the double-dip crowd.
This week, the retail sales report pointed to better consumer spending numbers. Another dip in jobless claims suggests improvement in the job market might not be far away. Industrial production gains and improving business survey data tell us the manufacturing recovery has legs. Finally, consumer prices remain in check, but producer prices are another story. Just as important, and in the spirit of the season, policymakers in Washington were able to put aside partisan differences and agree to an over $800 billion tax package that should likely provide a significant boost to economic activity over the next several quarters in 2011.
Beyond the next few quarters, a further improvement in US economic activity will require resolution of the outstanding issues holding back growth: clearing foreclosures, reducing uncertainty in the housing market, and repairing household balance sheets.
On unexpected improvement in US Data and unimpressive UK data, GBP/USD was under pressure since it topped up at 1.59 handle on Monday (Dec 13).
The pair slide downward breaking the 1.55 handle. It managed to found support just above 1.5450 and the 100% lower fibo. This reflective of bearish sentiment.
For next week I am looking at support at 1.53 handle with immediate resistance at 1.5630 and a break of that level the upper resistance is at 1.5740.
