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Dollar Bulls Retake the Whip Hand
marctomarket.com / by Marc Chandler / May 23, 2015
The US dollar had a good week. Indeed, the Dollar Index’s 3.3% rise was its best weekly performance since last September. After looking rather bleak, the divergence theme struck back with a vengeance.
ECB officials indicated that its sovereign bond buying program was turning more aggressive in the May-June period to get ahead of the summer markets. And not only did officials deny speculation that it could end its program early (before September 2016), but they reminded investors it could extend the program if needed. Remember every country that has adopted QE has had to do more than it initially anticipated.
At the same time, research at two regional Federal Reserves (San Francisco and Philadelphia) emphasized the seasonal distortions that have depressed Q1 GDP, especially since the crisis. Although the Board of Governor’s economists has played it down, the Bureau of Economic Analysis will make some changes to better take into account “residual seasonality” when it reports Q2 GDP on July 30.
The US economic data over the course of the week were mixed. For the first time in nearly two months, investors began rewarding the dollar for good economic data rather than punishing it for weaker data. There were three data highlights. First was the out-sized jump (20.2%) in housing starts. The second was the new cyclical low in the four-week moving average of weekly initial jobless claims. Third was the 0.3% rise in core CPI matches the August 2011 gain, which itself was the largest advance since January 2008. The year-over-year rate remained steady at 1.8% rather than slip lower as the consensus expected.
The post Dollar Bulls Retake the Whip Hand appeared first on Silver For The People.
Source: http://silveristhenew.com/2015/05/23/dollar-bulls-retake-the-whip-hand/
