Fasten your seatbelts for a big week on the US jobs front. After 517,000 new jobs were created in January, the expectation is for February to reflect growth in jobs but much less-200,000 in fact. At present US unemployment is at its lowest level since 1969 so the argument that the Federal Reserve is operating off incorrect and frothy data is wearing increasingly thin. On Tuesday Federal reserve Jerome Powell is testifying to the Joint Economic Committee ahead of Jobless Claims on Thursday and Non Farm Payrolls on Friday. Expect him to reiterate his uncompromising stance on raising interest rates. EUR/USD 1.0630.
With the Euro area inflation rate at 8.5% and core inflation not showing signs of topping out at 5.6%, it is unlikely that when ECB President Madame Lagarde speaks on Wednesday that she will give any other message than that interest rates will be going up by 0.5% on March 16. That would take the total of ECB increases to 350 bps since July. A further increase is expected in May after a pause in April. These days 2 months for Central Bank policy is a very long time. GBP/EUR 1.1320.
Just as a reminder, despite lock down and trade wars with both the USA and Australia, China still recorded growth in 2022 of 3%. China has now set a target of 5% economic growth for 2023 as widely expected. The other headline worth noting is the budget for defence spending which shows an increase of 7.2% ie in excess of the target growth rate. China now spends an absolute amount only surpassed by the USA. USD/CNY 6.9040.
US Personal Consumption
US Credit Card debt now stands at USD 0.986 Trillion. To put that in perspective it stood at USD 0.84 Trillion 1 year ago. So positive for the US economy that retail consumption is helping stimulate the economy, but expect to hear more about the ever increasing levels of personal debt and the incentives ie encouragement offered by finance houses to get consumers to take out even more credit cards without obviously demanding a reduction in the absolute levels of indebtedness.
It was this day in 1994 that 78-year-old Frank Sinatra collapsed on stage in Richmond Virginia USA while singing his best known hit. Redoubtable trooper that he was, he waved to the crowd as he was stretchered off. Fortunately the end was not there in Richmond for him that night and he went on to make a full recovery. Here it is:
And now the end is here And so I face that final curtain My friend I’ll make it clear I’ll state my case, of which I’m certain I’ve lived a life that’s full I traveled each and every highway And more, much more I did it, I did it my way
Regrets, I’ve had a few But then again too few to mention I did what I had to do I saw it through without exemption I planned each charted course Each careful step along the byway And more, much, much more I did it, I did it my way
Yes, there were times I’m sure you knew When I bit off more than I could chew But through it all, when there was doubt I ate it up and spit it out I faced it all and I stood tall and did it my way
For what is a man, what has he got? If not himself then he has naught Not to say the things that he truly feels And not the words of someone who kneels Let the record shows I took all the blows and did it my way
Discussion and Analysis by Humphrey Percy, Chairman and Founder
European Central Banks Going in to the final few hours before the ECB announcement and press conference on interest rates, the expectation was for a rise of 25BPs to 4% which is the highest level since the inception of the EUR in 1999. The market was poised to send the EUR lower whether the decision […]
EURUSD lifeline? Contrary to where market consensus would have read EURUSD at the start of the year, the currency pair has failed to find support as it grinds ever lower. The recent peak of 1.12 was short lived and largely macroeconomic factors have swiftly and confidently forced the Euro-Dollar currency pair to retreat. The causality […]
Buoyant vessels If loose lips sink ships, then the monetary policy institutions of the European Central Bank, Bank of England and Federal Reserve should be firmly afloat. Despite the President of the ECB speaking yesterday in London, there are still very few clues available about what lies in store for the European monetary authority’s September […]