Mixed Data From the US
Good morning, and welcome to the day after some mixed data from the US resulted in a bit of US Dollar weakness and Sterling and Euro making steps, if not strides against the Greenback. There was an unexpected, significant upward revision to Q3 domestic demand but consumer confidence was down. This figure highlighted a slowing in job growth, lessening expectations of inflation and a decrease in manufacturing shipments.
For so long, the Dollar and the US economy have been the markets’ blue-eyed boys.. Could this be about to change? We have seen Quantitative Easing have a major impact and with this likely to be tried by the Eurozone and Japan next year, is this likely to have the same effect for their currencies? In all probability, no. With interest rate hikes from the Fed likely, this could well neutralise the cross border effects of QE and similarly the ECB may have to increase rates from its current negative stance for QE to be successful as otherwise the negative rates could appear to be like additional taxation.
In the UK, there seems to have been an unhealthy obsession with the housing market for as long as I can remember and slowly but surely the market appears to be changing. Nationwide have announced a 6 month slump in lending for the previous 6 months as stricter lending regulations make it more difficult to get mortgages.With a general election looming, demand slowing and Labour proposing its “Mansion Tax” should they get in power, the housing market could be in for a bumpy ride.
This morning’s main event is UK GDP and then this afternoon, the US takes centre stage as it releases a huge amount of data before they all go and enjoy Thanksgiving. We have Durable Goods Orders, Initial Jobless Claims, Personal Consumption Expenditure, Consumer Sentiment and Pending Home Sales.