Tuesday July 7, 2015 - 16:29:05 GMT
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Comparisons: Key Forex Trading Econony Comparisons
John M. Bland
I use the PMI Manufacturing reports as a benchmark for how economies are currently perfoming. While Manufacturing PMI data tend to be a very good measures of current conditions, I do not find them to be consistenly reliable forecasters of future economic performance. My charts are three-month moving averages. I smooth the data to remove "noise" from the reports.
Major Trading Currencies
Currently, you can see how the U.S. has started to recover from the slowdown in the first part of this year, but it has a long way to go to reach the recent peaks seen in late 2014. The Eurozone has been on a steady recovery path this year and might now even be accelerating. According to the data, the U.K. recovery has been running out of steam. Japan continues on a lackluster path in spite of optimistic talk from the Japanese government and the central bank.
In terms of the implications for forex valuations, these data are supportive of the USD and EUR, and neutral for the GBP and JPY.
Australia, Canada and China
Falling oil prices in late 2014 were a weight on the Canadian economy. You can see how it might have started to stabilize when petroleum prices bottomed. China has yet to recover from the global economic slowdown which reduced demand for its exports. Australia continues to suffer from reduced raw material exports to China. You can see how the U.S. has started to recover from the slowdown in the first part of 2015, but it has a long way to go to reach recent peak levels from late 2014.
In terms of the implications for forex valuations, these data are supportive of the USD, neutral for the CAD and negative for the CNY and AUD.
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