Posts Tagged ‘Dollar’
Foreign Exchange - UK Weekly Update - Monday, November 5, 2012 11:47 - 0 Comments
With the US election looming large on the international radar this week, all eyes will be looking to the outcome and trying to figure out the implications for the global economy. The markets are no exception.
Last week saw catastrophe hit the US as Hurricane Sandy swept across the east coast, shutting cities down for a number of days and causing tens of billions of dollars-worth of damage. Indeed, it was the longest period of time that the New York Stock Exchange had been shut for weather reasons in its history.
The estimated cost of Sandy has ranged from $20-$60 billion and will shave up to 0.4 percentage points of growth in the fourth quarter. However, the rebuilding of housing and offices and the clean-up of cities could out-weigh this contraction, adding 0.5 percentage points to Q1 growth.
There has been much talk about the rebuilding process adding to the productive base of the US. These views are misguided. Productive potential would only be improved if the construction projects bettered the structural foundations of economy, rather than rebuilding them to the same specification.
The race to become US president looks to be going down to the wire, as both Obama and Romney frantically canvass to secure what could be crucial, last ditch support. As Sandy blew some of the President’s campaigning plans off course, US unemployment figures posted some strong numbers which worked in Obama’s favour.
On Friday the Bureau of Labor Statistics released payroll and unemployment statistics for the month of October. As we predicted, the number of nonfarm payrolls increased above market expectations, adding 171,000 payrolls (versus 125,000 expected) and the figures for August and September were both revised upwards, adding a further 84,000 payrolls between them. The unemployment rate ticked upwards to 7.9% (from 7.8%) as the civilian labor force and participation increased – signalling an improvement in employment expectations.
A decent week for economic announcements was strengthened by the ISM Manufacturing release as the index increased to 51.7 from 51.5 (a reading over 50 represent expansion in the sector). Markets had expected a slowing of the rate of increase.
Tomorrow evening voting in the 57th Presidential election closes. Different analysts have put each candidate ahead and it promises to be an extremely tight race, but, it is still our baseline scenario that President Obama is re-elected for a second term – even if he loses to popular vote. President Obama currently holds the lead in the swing states that will likely decide the outcome of the election and it is these advantages that will propel Obama forward.
The US, a catalyst of the global economy, is in a fragile state and poor economic policies could tip it back into recession – not least the looming ‘Fiscal Cliff’ which would automatically hike taxes and slash spending on January 1st. The relative lack of detail from either candidate’s economic policy has detracted from the debate, but, as one commentator put it, better the devil you know.
Whichever way it goes, there will be clear implications for the UK recovery and the fortunes of sterling in the months ahead.
- World First in the press: ft.com 11 June 2010
- World First in the press: The Sunday Times 22 November 2009
- World First in the press: The Times 29 September 2009
- Sterling Redemption Underway – World First – Sterling Update – 1st June 2009
- Something in the Air? – World First – Sterling Update – 5th May 2009
- The Long Road Ahead – World First – Sterling Update – 27th April
- Auto makers get backhanded – World First Morning Update – 31st March 2009
- World First in the press – City AM Monday 26 January 2009
- Interest Rates Bottom Out – World First’s Sterling Update – 22nd December 2008
- Bank of England Rate Announcement; A Market Waits – World First’s Morning Update – 4th December 2008
- World First on telegraph.co.uk – Monday 17 November 2008
- World First in the press: Mail on Sunday 2 November 2008
- Fed Rate Cut Bad News for Dollar – World First’s Morning Update – 30th October 2008
- Equities Lead The Way – World First’s Morning Update -28th October 2008
- The Perfect Storm – World First’s Morning Update – 27th October 2008
- Risk Aversion Continues – World First’s Morning Update – 24th October 2008
- Unanimous Cut as Risk Aversion Builds – World First’s Morning Update – 23 October 2008
- Euro Battles on as France act on Banking System – World First’s Euro Update – 21st October 2008
- Sterling Tested as Dollar Finds Support – World First’s Morning Update – 21st October 2008
- Rand Devalues and Political Instability Continues – World First’s Rand Update – 20th October 2008
- Volatility Continues as Emerging Markets Feel the Pressure – World First’s Sterling Update – 20th October
- Confidence Shattered in the US – World First’s Morning Update – 20th October
- Interest Rates Slashed As Recession Looms – World First’s Morning Update – 9th October 2008
- Volatility Continues As World Waits – World First’s Morning FX Update – 26th September 2008
- Fears over Bail Out Continue – World First’s Morning FX Update – 24th September 2008
- World First NZD/AUD Weekly Update – 22nd September 2008
- World First’s Morning FX Update – 29th August 2008
- World First’s Morning FX Update – 27th August 2008
- World First’s Morning FX Update – 13th August 2008
- World First’s Morning FX Update – 12th August 2008
- World First’s Morning FX Update – 23rd June 2008
- World First’s Morning FX Update – 20th June 2008