It's a busy week ahead in the FOREX market as economic reports of high importance will be released. Starting on Tuesday at 10AM EST, October Consumer Confidence for the US will come out; analysts expect 49.5%, higher than the previous 48.5%. I figured there must be some relationship between election season and the attitudes of consumers. Take a look at this data:Consumer Confidence and Elections
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I ran a model to test for significance, which proved that there is no valid relationship, probably because I relied solely on election v consumer confidence data. However, this author argues that the positive changes in Consumer Confidence out-way the negatives during election season. Based on history, one can expect consumers to have more confidence in the economy, but there's a lot of room for error in this assumption. Therefore, I think it's safe to expect a slight rise in consumer confidence, but probably below expectations. I would better expect consumers to stay negative on the economy until November. Once we get the results, then we'll see what consumers really think based on an actual political shift, not just expectations.
On Wednesday at 8:30AM EST, US Durable Goods numbers will be announced. Analysts have continued to remain bullish on these reports, expecting durable goods to increase to 2% following a previous -1.5%. Manufacturing is sluggish, and ISM numbers are mixed, more so negative. Perhaps a lower dollar helped spur interest for US goods. Again, I expect a rise (being that the previous number was so low), but less than expected.
Know that if the dollar does bounce back up, there will be a negative affect on the Euro and Gold. Many say that the dollar has fallen to lows, and are able to technically forecast a rally based on the flurry of data coming out. Perhaps this is true, especially considering that home sales came out higher in September. This was mainly because of a decline in the median price of homes, according to realtors. However, with the foreclosure halts at major banks under government pressure, these home buyers may struggle trying to gain legal ownership of distressed properties.
Either way, the expectations and the real facts that will come out this week will support my view that the US economy will continue to move sideways given the shaky truth in economic reports. More specifically, in economic terms, the economy will increase at a decreasing rate.
------ outside the US------
The big announcement will be New Zealand's Interest Rate Decision. I agree with analysts expectations that the central bank will keep rates steady at 3%. One reason is because of the currency war. With so much devaluation, now is not the time to cause a major change in your currency led on by government decisions. Also, New Zealand is an export driven economy, so a steady interest rate will help to depreciate the Kiwi in the short term based on real facts. The hard data supports a steady interest rate decision. New Zealand reported lower CPI, stable GDP YoY, lower Q2 GDP, and the last interest rate decision was steady. The economy is not expanding to the point where it needs to be cooled with monetary policy.
I ran a model to test for significance, which proved that there is no valid relationship, probably because I relied solely on election v consumer confidence data. However, this author argues that the positive changes in Consumer Confidence out-way the negatives during election season. Based on history, one can expect consumers to have more confidence in the economy, but there's a lot of room for error in this assumption. Therefore, I think it's safe to expect a slight rise in consumer confidence, but probably below expectations. I would better expect consumers to stay negative on the economy until November. Once we get the results, then we'll see what consumers really think based on an actual political shift, not just expectations.
On Wednesday at 8:30AM EST, US Durable Goods numbers will be announced. Analysts have continued to remain bullish on these reports, expecting durable goods to increase to 2% following a previous -1.5%. Manufacturing is sluggish, and ISM numbers are mixed, more so negative. Perhaps a lower dollar helped spur interest for US goods. Again, I expect a rise (being that the previous number was so low), but less than expected.
Know that if the dollar does bounce back up, there will be a negative affect on the Euro and Gold. Many say that the dollar has fallen to lows, and are able to technically forecast a rally based on the flurry of data coming out. Perhaps this is true, especially considering that home sales came out higher in September. This was mainly because of a decline in the median price of homes, according to realtors. However, with the foreclosure halts at major banks under government pressure, these home buyers may struggle trying to gain legal ownership of distressed properties.
Either way, the expectations and the real facts that will come out this week will support my view that the US economy will continue to move sideways given the shaky truth in economic reports. More specifically, in economic terms, the economy will increase at a decreasing rate.
------ outside the US------
The big announcement will be New Zealand's Interest Rate Decision. I agree with analysts expectations that the central bank will keep rates steady at 3%. One reason is because of the currency war. With so much devaluation, now is not the time to cause a major change in your currency led on by government decisions. Also, New Zealand is an export driven economy, so a steady interest rate will help to depreciate the Kiwi in the short term based on real facts. The hard data supports a steady interest rate decision. New Zealand reported lower CPI, stable GDP YoY, lower Q2 GDP, and the last interest rate decision was steady. The economy is not expanding to the point where it needs to be cooled with monetary policy.
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