Morning Commentary: Slipping Quietly into the Weekend

Foreign Exchange - Morning Commentary
Slipping Quietly into the Weekend
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David Atkinson
David Atkinson
Foreign Exchange Sales Manager
We come to the end of this week with very little fanfare.  The dollar is again stronger today against most currencies, but by fractions.  Asian equities ended trading overnight slightly up only to be followed by European equities taking a slight dive.  U.S. equities are opening up fairly flat.  The giant bond markets have probably been the most boring this week, with almost no movement to speak of in the major economies.  There are interesting stories when we go further into emerging markets, such as a surprise rate hike from Turkey yesterday.

We touched on gold earlier in the week, and it has broadly continued to drop this week, around $1858 as I write.  The story being discussed in gold relates to how quickly governments can reflate their economies.  “Reflate” is a tricky term these days though.  For the Fed that would mean getting back to where they are within spitting distance of the 2% target rather than halfway between zero and the target – or “average” as the target is to be known going forward.

A big part of the U.S. discussion is on whether there will be a fourth stimulus package.  Based on the action in gold markets, I am beginning to think that Senate Majority Leader McConnell has a point when he says that even with broad agreement on general amounts, the legislation process of working through the details will not be finished before the election.

A side story that is developing that could be interesting is James Bullard, president of the St. Louis Fed.  After earning dovish credentials in recent years, he said in an interview this week that he thinks the U.S. economy has a shot to completely recover by year’s end, even to the point of not needing any more stimulus.  Frankly he is alone among his Fed colleagues in saying that, but Bullard has been prescient in recent years in foreseeing economic trends before they became apparent to everyone else.
 
The only real data point today was U.S. Durable Goods in August, which rose 0.4%.  That was below expectations but some analysts are seeing some good signs in the details on equipment orders and inventory levels.

Have a great weekend all.  Andy is back Monday after a few well-deserved days off and we all look forward to his return.
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