U.S.: Unemployment’s Rate is the Achilles Heel
by Angelo Airaghi [Guest Analyst]
8/26/2009
As housing is giving some relief to household pockets, the Federal Reserve warns about a slow recovery. The Euro, in the mean time, is testing key resistance levels against the U.S. dollar.
Tangible signs of improvements are beginning to show up, albeit the recovery remains fragile in the United States. In July, the conference board index increased 0.6% month-on-month from + 0.8% in June. It was the fourth consecutive month of increase, giving further prove that the U.S. economy might have bottomed. In a speech at the Jackson Hole Symposium, Fed Chairman Bernanke confirmed that the worst might be over for global economies, thus indirectly anticipating a safe-haven demand’s decline for U.S. dollars and Treasuries in the coming months. Nonetheless, the Federal Reserve will keep rates low for the first part of 2010 with inflation so mild. In July, the producer price index (PPI) fell 0.9% versus the expected -0.4%. In reality, after two months of gains, 6.5% in June and 15% in May, housing starts slid by 1.0% in July to 581,000 annualized (+2.5% expected). Nevertheless, singles component (three-quarters of the market) rose 1.7%, while multiple houses declined 13.3%. Starts are still above the average of the first three months of the year, although away from the over 2 million produced in 2005.
Existing home sales increased at the contrary by 7.2% (+2.0% expected) to 5.24 million in July from 4.89 million in June. Inventories remained unchanged at 9.4 months of supply. However, both single homes and condos improved. The first climbed by 6.5% and the second by 12.5%. Clearly, the first-time homebuyers tax credit program, which allows first time buyers to receive a refundable credit of USD 8.000.-. (10% of the home value, if lower) until December 1st, have helped home sales. Nonetheless, the positive domino’s effect created by the activity in the housing sectors could continue in the future as well supported by low interest rates and affordable prices. Home ownership remains an American dream. Consequently, a bipartisan group of U.S. senators are requesting that the tax credit program to be renewed for an extensive period of time.
Is the German’s recovery sustainable?
The decrease of inventories and the rise of exports, the European trade balance registered a surplus of Euro 4.6 million in June from Euro 2.1 billion in May, are helping the European economy out of the recession. This is what stands out from the latest data, albeit the recovery might be slow and fragmented. In effect, after improving for six straight months since February, the Euro zone composite Purchasing Manager’s Index finally climbed to the critical level of 50 in August. The manufacturing sector printed 47.9 from 46.3, while the services PMI showed 49.5 from 45.7. In Germany, the composite index was 54.2 in August from 49.0 in July, the highest level in more than one year. In France, it rose instead to 50.9.
The Euro zone Gross Domestic Product (GDP) declined only an estimate of 0.1% in the second quarter from the 2.5%, while in Germany and France, the GDP increased 0.3%. The German’s economic sentiment index from the ZEW center of Economic Research climbed to 56.1 in August, way above the average of 26.5. However the current economic situation index, which rose only to -82.1 points, testifies how Germans remain prudent over the health of the economy. In fact, the European Central Bank is warning that the German rebound might have been exacerbated by the economic measures introduced this year and could not be sustainable over the short term. As a result, ECB will keep rates low for now, the Producer Price Index (PPI) fell almost 8.0% year-on-year in July, and might increase them again once the economic momentum will trend higher.
EUR/USD: Testing key resistance lines.
EUR/USD: The Euro is again at crucial technical levels. A move above 1.4560 would target 1.4620, 1.4740. A decline below 1.3750 is instead necessary for 1.3550.
GBP/USD: A move below 1.6125 would target 1.6020. A breakout above 1.6820 would take the price to 1.6880.
USD/JPY: The market is trading between 98.00 and 92.00. A move above 95.40 could target 96.00. A decline below 92.30 could instead take to price to 91.70.
USD/CAD: The US dollar finds support at 1.06. The resistance is instead at 1.1050.
Existing home sales increased at the contrary by 7.2% (+2.0% expected) to 5.24 million in July from 4.89 million in June. Inventories remained unchanged at 9.4 months of supply. However, both single homes and condos improved. The first climbed by 6.5% and the second by 12.5%. Clearly, the first-time homebuyers tax credit program, which allows first time buyers to receive a refundable credit of USD 8.000.-. (10% of the home value, if lower) until December 1st, have helped home sales. Nonetheless, the positive domino’s effect created by the activity in the housing sectors could continue in the future as well supported by low interest rates and affordable prices. Home ownership remains an American dream. Consequently, a bipartisan group of U.S. senators are requesting that the tax credit program to be renewed for an extensive period of time.
Is the German’s recovery sustainable?
The decrease of inventories and the rise of exports, the European trade balance registered a surplus of Euro 4.6 million in June from Euro 2.1 billion in May, are helping the European economy out of the recession. This is what stands out from the latest data, albeit the recovery might be slow and fragmented. In effect, after improving for six straight months since February, the Euro zone composite Purchasing Manager’s Index finally climbed to the critical level of 50 in August. The manufacturing sector printed 47.9 from 46.3, while the services PMI showed 49.5 from 45.7. In Germany, the composite index was 54.2 in August from 49.0 in July, the highest level in more than one year. In France, it rose instead to 50.9.
The Euro zone Gross Domestic Product (GDP) declined only an estimate of 0.1% in the second quarter from the 2.5%, while in Germany and France, the GDP increased 0.3%. The German’s economic sentiment index from the ZEW center of Economic Research climbed to 56.1 in August, way above the average of 26.5. However the current economic situation index, which rose only to -82.1 points, testifies how Germans remain prudent over the health of the economy. In fact, the European Central Bank is warning that the German rebound might have been exacerbated by the economic measures introduced this year and could not be sustainable over the short term. As a result, ECB will keep rates low for now, the Producer Price Index (PPI) fell almost 8.0% year-on-year in July, and might increase them again once the economic momentum will trend higher.
EUR/USD: Testing key resistance lines.
EUR/USD: The Euro is again at crucial technical levels. A move above 1.4560 would target 1.4620, 1.4740. A decline below 1.3750 is instead necessary for 1.3550.
GBP/USD: A move below 1.6125 would target 1.6020. A breakout above 1.6820 would take the price to 1.6880.
USD/JPY: The market is trading between 98.00 and 92.00. A move above 95.40 could target 96.00. A decline below 92.30 could instead take to price to 91.70.
USD/CAD: The US dollar finds support at 1.06. The resistance is instead at 1.1050.
Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.
1 komentar:
Every investor must start-up a plan before heading up on buying a property. Learning the basics of real estate is essential rather than visualizing the money aspect. Listen to skilled professionals like bankers, estate agents, home inspectors, etc., they most likely know the latest trend.
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