In a holiday
shortened week last week due to Thanksgiving in the U.S., a number of reports
came in with better than expected results, even if their timing was skewed from
the normal release days as a result of the holiday (we have come to expect
certain potential Forex market movers, such as the Reuters / Univ of Michigan
Consumer Sentiment index which normally comes on a Friday but was on Wednesday
last week) to appear on their appointed days.
Durable
Goods, purchases that are expected to have a longer life, got a boost last
week, coming in much better than expected for October. They jumped 3.0% after
falling 0.8% in the previous period. The outcome was as a result of a dramatic
increase in the supply of non-defence aircraft and parts. They jumped by no
less than 81.0%, after falling 32.3% previously. Non-defence capital goods, which
reflect consumer spending, were up by 0.4%, which is also a good indicator for
the state of the economy.
Separately, New
Home Sales were also up strongly in October. New homes are more important for
the economy than existing homes, so the good news for the Federal Reserve continues
here also.
Heat builds for rate rise in new
month
All of the
above feeds into the by now widely held belief by market participants that
there will indeed be a rise in interest rates in the U.S. at the next monetary policy
meeting of the Federal Reserve, which is due to take place on December 15th
and 16th. So strong is this expectation now that it is not outside
the bounds of possibility that the U.S. currency could be entering overbought
territory, and we could be setting up for a classic “Buy the rumour, sell the
news” type of scenario.
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