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2 Apr 2013
Forex Flash: Increasingly difficult for US to maintain positive economic surprises - BBH
FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that as economists adjusted their forecasts for the US economy, it is more difficult to maintain positive surprises.
In addition, they note that the economy appears to be finishing Q1 on a soft note that is likely to carry into Q2. This reinforces the seasonality component to some of the US data. They add, “We would still argue that the US economy has proven resilient, particularly the consumer. It appears that the household de-leveraging process may be ending, which is something that needs to be monitored going forward. Looking to today’s sessions, February factory orders is due at 15:00 GMT, expected at 2.9% m/m vs. -2.0% m/m in January. March US auto sales are also due, expected at 15.3 mln vs. 15.33mln in February.”
They feel that after the softer than expected March ISM manufacturing reading on Monday, markets will be sensitive to signs that the US economy is slowing. The employment component in the ISM report rose to 54.2 from 52.6 in february, and was the highest since June 2012. They finish by adding, “Market consensus for the important jobs report is hovering around +195k for nonfarm payrolls, down from +236k in February.”
In addition, they note that the economy appears to be finishing Q1 on a soft note that is likely to carry into Q2. This reinforces the seasonality component to some of the US data. They add, “We would still argue that the US economy has proven resilient, particularly the consumer. It appears that the household de-leveraging process may be ending, which is something that needs to be monitored going forward. Looking to today’s sessions, February factory orders is due at 15:00 GMT, expected at 2.9% m/m vs. -2.0% m/m in January. March US auto sales are also due, expected at 15.3 mln vs. 15.33mln in February.”
They feel that after the softer than expected March ISM manufacturing reading on Monday, markets will be sensitive to signs that the US economy is slowing. The employment component in the ISM report rose to 54.2 from 52.6 in february, and was the highest since June 2012. They finish by adding, “Market consensus for the important jobs report is hovering around +195k for nonfarm payrolls, down from +236k in February.”