IronFX Daily Commentary by Sakis Paraskevov | 24/12/2015
December 24, 2015 9:55 am
• US latest batch of data show economy is on solid footing • US personal income rose at the same rate as consumer spending in November. The data exceeded expectations and added to the list of encouraging indicators for the final quarter of the year. • These indicators show an improving labor market that is consistent with the Fed’s full employment target. It is also an indication that wages may be further supported. • Durable goods orders for the same month were expected to fall, but instead remained flat adding to the latest batch of solid data. • The fundamental outlook of the US economy appears to be on a solid footing, following the historic December rate hike by the Fed. If labour market data continue to improve and consumer spending remains healthy, the prospect of 3-4 rate hikes in 2016, as suggested in the Fed’s ‘dot plot’, could realize. • There was no major effect on the dollar at the release of these indicators. However, the market currently prices in less rate hikes than the Fed’s dot plot suggest. If the data continue to improve, USD could regain its glamour, as the market will need to raise its expectations somewhat closer to the Fed’s. • Today: • US: The initial jobless claims for the week ended Dec.18 are expected to have decreased slightly from the previous week, while the 4-week moving average is forecast to have increased. In the midst of a thin market, a slight improvement in initial jobless claims could support the dollar a bit.
• US latest batch of data show economy is on solid footing
• US personal income rose at the same rate as consumer spending in November. The data exceeded expectations and added to the list of encouraging indicators for the final quarter of the year.
• These indicators show an improving labor market that is consistent with the Fed’s full employment target. It is also an indication that wages may be further supported.
• Durable goods orders for the same month were expected to fall, but instead remained flat adding to the latest batch of solid data.
• The fundamental outlook of the US economy appears to be on a solid footing, following the historic December rate hike by the Fed. If labour market data continue to improve and consumer spending remains healthy, the prospect of 3-4 rate hikes in 2016, as suggested in the Fed’s ‘dot plot’, could realize.
• There was no major effect on the dollar at the release of these indicators. However, the market currently prices in less rate hikes than the Fed’s dot plot suggest. If the data continue to improve, USD could regain its glamour, as the market will need to raise its expectations somewhat closer to the Fed’s.
• Today:
• US: The initial jobless claims for the week ended Dec.18 are expected to have decreased slightly from the previous week, while the 4-week moving average is forecast to have increased. In the midst of a thin market, a slight improvement in initial jobless claims could support the dollar a bit.
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