Nov 29 2007
US GDP Data Might Take the USD Further Down
As the month of November comes to end, talks of the Federal Reserve cutting interest rates have done nothing but gain steam. The rumors have has so much weight that the Dow Jones and most other Wall Street outlets saw gains yesterday just from the notion that such cuts might eventually come. Yesterday the Fed’s second in command, Vice Chairman Donald Kohn noted that ”flexible and pragmatic policy making” was key in turning around the US economy and that the Fed would “act as needed” in cutting interest rates, if such measures were needed.
The release of the Beige Book yesterday further solidified the expectations of Government intervention in the economic “crisis” taking place now. The Beige Book identified that there was in fact growth in US districts, however tedious it might have been. The report touched on how US consumers have reacted to economic uncertainty with “relatively soft retail spending” in the beginning of holiday shopping. The Beige Book goes on to note how the ongoing credit crisis has created “barriers for some buyers” in the real estate market as available homes are on the rise. Manufacturing and products and services from food and energy inputs rose significantly according to the Fed report.
The events from yesterday have continued to contribute to the glairing uncertainty in the US, even so much as to produce completely different opinions from members of the same governing body. Kohn’s remarks yesterday were an anomalous with those of member from his own board. Such indecisiveness amongst the Fed could be disastrous as most of the positive movement that the greenback is seeing, is coming from expectations of Federal intervention.
As we look ahead to today, the US news schedule is once again full of significant information. Annual GDP and GDP deflators, along with unemployment claims will precede the 15:00 GMT release of the New Home Sales report. Rounding out the day we will here words from Fed Governor Mishkin, who many hope will reiterate Donald Kohn’s call for swift and necessary intervention.
With a full calendar aside from US events, it will be intriguing to see what trends the greenback develops over the course of the day.
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