"Potemkin" statistics. Fundamental analysis for 05.05.2014
05.05.2014
Friday's data on the U.S. labor market if difficult to call anything but surprising. The unemployment rate fell to 6.3% - far below the previous benchmark of the Fed to raise rates. Despite the fact that the Fed has previously said that unemployment is not separately considered as a possible trigger for changing the course of monetary policy, the data can still give signals. However, they are positive only on the surface.
The thing is, the reason for the sharp drop in unemployment (in the last month the figure was 6.7%) was not the creation of new jobs, but workforce reductions - this month almost a million people found themselves outside of the labor market. As a result, this led to a drop in the level of participation from 63.2% to 62.8% - this is the minimum of the 1970s. In their comments, even the American statistics express bewilderment over these figures.
A definite positive were the figures on the job growth, amounting to 288k. However, wages still do not show any significant growth, and without the consumption will not gain momentum for a new round of growth. Strictly speaking, therefore the initial “bear” reaction of the Eurodollar was replaced by growth – the reduction of unemployment was "exaggerated" and job growth is unlikely to be reflected in the statistics on retail sales.
Against this background, as if behind a smokescreen, the interview of the head of the Federal Reserve Bank of Dallas, was left virtually unnoticed in which he outlined the specific period of probable closure of QE3 - October this year. According to him, immediately after the completion of the program the regulator will proceed with the consideration of increase of the rates. If the words of Janet Yellen will not turn out to be empty hot air, then as soon as April 2015 the rate could be increased.
Meanwhile, European statistics have reported about the reduction of the production costs by 0.2% in March. However, the ECB can sleep easy - the cause of negative data lies in the fall in energy prices. At the next meeting, Mario Draghi will use the April statistics, which recorded an increase in inflation from 0.5% in March to 0.7%. Consequently well see no reduced rates, and no launch of QE.
I continue to hold on to the Euro/dollar purchase. Friday's statistics on the U.S. do not allow the ‘bears’ to break the current uptrend. Most likely, after some correction, we will see renewed growth. The trigger for this, it is likely to become the data on the European PMI, which comes out on Tuesday - indicators are likely to be in the black, which will allow the bulls to resume their offensive strategy.
RoboForex Analytical Department
The thing is, the reason for the sharp drop in unemployment (in the last month the figure was 6.7%) was not the creation of new jobs, but workforce reductions - this month almost a million people found themselves outside of the labor market. As a result, this led to a drop in the level of participation from 63.2% to 62.8% - this is the minimum of the 1970s. In their comments, even the American statistics express bewilderment over these figures.
A definite positive were the figures on the job growth, amounting to 288k. However, wages still do not show any significant growth, and without the consumption will not gain momentum for a new round of growth. Strictly speaking, therefore the initial “bear” reaction of the Eurodollar was replaced by growth – the reduction of unemployment was "exaggerated" and job growth is unlikely to be reflected in the statistics on retail sales.
Against this background, as if behind a smokescreen, the interview of the head of the Federal Reserve Bank of Dallas, was left virtually unnoticed in which he outlined the specific period of probable closure of QE3 - October this year. According to him, immediately after the completion of the program the regulator will proceed with the consideration of increase of the rates. If the words of Janet Yellen will not turn out to be empty hot air, then as soon as April 2015 the rate could be increased.
Meanwhile, European statistics have reported about the reduction of the production costs by 0.2% in March. However, the ECB can sleep easy - the cause of negative data lies in the fall in energy prices. At the next meeting, Mario Draghi will use the April statistics, which recorded an increase in inflation from 0.5% in March to 0.7%. Consequently well see no reduced rates, and no launch of QE.
I continue to hold on to the Euro/dollar purchase. Friday's statistics on the U.S. do not allow the ‘bears’ to break the current uptrend. Most likely, after some correction, we will see renewed growth. The trigger for this, it is likely to become the data on the European PMI, which comes out on Tuesday - indicators are likely to be in the black, which will allow the bulls to resume their offensive strategy.
RoboForex Analytical Department
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Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex bears no responsibility for trading results based on trading recommendations described in these analytical reviews.