Friday March 14, 2014 - 21:43:47 GMT
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Spring Global Upturn? 15 March 2014 Trading ThemesFOMC Decision/Yellen Press Conference
If you look at the broad sweep of global data over the past few weeks, it is becoming increasingly evident that the global economy is now on a solid improving path. We are not seeing a rapid recovery, but it appears that a slow and perhaps uneven rebound might be in the works. A key piece of data a week ago was the February U.S. employment report, which gained despite the distortions of an unusually severe winter in the U.S. We expect to see U.S. data to improve as weather distortions start to work out of the economic statistics.
This Wednesday will see a Fed Decision. No changes in the present course of policy are widely expected. With long-term U.S. rates falling and the economy doing better, there might be a temptation to accelerate the pace of the Fed asset purchase taper, but caution suggests they will keep to their $10bln per month reduction pace. At this juncture, we can think of no reason to even consider reducing the taper. This month's decision will be accompanied by Yellen's first press conference. She typically is very well prepared for these events and tends to be clearer than many of her predecessors in her public statements. We do not expect this meeting to be market-moving. Has ECB's Draghi Blnked Due to the Strong Euro?
On Thursday of the week just ending, ECB President Draghi finally commented on the value of the euro, saying that actions could be taken to combat fallin prices in the Eurozone and that the value of the exchange rate is a factor the ECB always considers. Dealers took his comments as an indirect comment that the value of the currency might now be too high. It is possible that the EURUSD 1.40 area is seen as the point of pain for the ECB. If its value is not capped here then a run at 1.50 could ensue. Keep an eye on revised Eurozone February HICP (preliminary 0.80% y/y) data on Monday. Week Ahead Calendar
The data calendar for the week ahead is an active one. MOnday sees final February Eurozone HICP (CPI), then on Tuesday the German ZEW data will be released along with U.S. CPI. U.S. Housing data will be coming out all week. The Highlight on Wednesday will be U.K. Employment data and the latest Bank of England policy minutes. Thursday highlights include the latest Swiss National Bank policy decision and U.K. Retail Sales. Then on Friday, Canadian Retail Sales and CPI data are due. Be sure to refer daily to the Global-View Economic Calendar
and the Forex Forum
for key items (actual data, selected charts, etc.) as they are released.
John M. Bland
Forex Trading News
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