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Notable events the week of 12th January 2015

Wednesday the 14th:

French and Ireland HICP readings

US Fed’s Plosser (hawk, non-voting) speaks on economy in Philadelphia


Thursday the 15th:

US PPI expecting -0.4 versus -0.2 prior

US PPI excluding food and energy +0.1 versus 0 prior


Friday the 16th:

Fed’s Kocherlakota (dove, non-voting) speaks on economy and monetary policy

Capacity Utilization 80 versus 80.1 prior

Industrial production -0.1 versus 1.3

Fed’s Williams (dove, voting member) speaks in San Francisco

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The Ruble: A bear of a market

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The Russian ruble fell to a record low against the dollar today, losing 5.7%, in a stinging rebuke to the central bank’s attempt to stop the carnage by raising interest rates to 17%. While on the face of it a 650 basis point rise may seem huge, it does little to convince the market that the Russian economy will recover from sanctions and a collapse in the price of oil. One should expect the ruble to face continued headwinds as a result.

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Eurozone Manufacturing PMI


Unfortunately there is more bad news for Mario Draghi this morning with weakness across the major Euro area economies as manufacturing PMI’s slipped to 50.1 from 50.4. Particular worry is that Germany, the Eurozone’s largest economy, registered 49.5, down from 50 previously and a 17-month low. A reading above 50.0 for the index indicates an expansion in activity, while a reading below that level signals a contraction. In this scenario of continued feebleness in economic growth, diminished consumer confidence, and high unemployment, the ECB must deliver on unconventional easing to avoid a Japanese style deflationary spiral.

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October Non-farm payrolls

Today’s release of the October labor department’s non-farm payrolls increase of 214,000 jobs and a drop from 5.9% to 5.8% in the unemployment rate is another solid showing for the US economy. Although the market was looking for a number closer to 234,000 (Bloomberg consensus), the monthly running average above 200,000 for the year is what economists will highlight. Consistent growth in the employment picture will continue to provide the backdrop for a strong dollar and should embolden US dollar bulls to add to their current medium-term positions. Short-term traders on the other hand will be more cautious on a Friday session to book profits before the weekend.

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