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I picked the most traded pair EURUSD as an example, traders are reacting and the sentiment are mostly focus with this pair. First, we look back to the much awaited data results from US economy which surpass (surprise) us and breaking all their data record for several years.
GDP
The result of second half of 2014 GDP data rising at about a 3% annualized rate as the expansion cycle matures and hindrances
to growth ease. Given the dismal first quarter (a -2.9% growth rate) and the likelihood that higher food and energy prices will dampen growth in the second quarter, GDP is likely to rack up only about 1.5% growth for the whole of 2014. The second- quarter GDP gain is likely to total about 2.5% (annualized).
The stage is set for much improved performance, however. Disposable income adjusted for inflation grew at a healthy 3.0% annualized rate in January through May. Consumer confidence has bounced back, climbing above its 2013 peak, and is now at its highest level since before the recession. Motor vehicle sales in May hit their highest level in eight years. And an index of manufacturing purchasing managers’ activity points to strongly expanding output. Plus, hiring is on the rise, new unemployment claims have been running at a very low rate in May and June, and retail sales have rebounded.
[table]
What’s more, there’s still a chance that growth will accelerate more dramatically in the second half of the year. Consumer spending and confidence remain way below what would be considered normal levels by the standards of past economic expansions. As job growth returns and consumers feel more secure, more robust income and spending increases may well be triggered, pushing second-half growth over the expected 3% pace. While that happening in what remains of this year is an outside chance, it’s a good bet that in 2015 such a virtuous cycle will kick in.
As for the sharp first-quarter slowdown, it isn’t quite as disheartening as it first appears. The decline doesn’t indicate a systemic weakness, and there may even be some offsetting upward bounces yet to come. Weather depressed consumption of goods and housing. Both exports, especially to China, and business investment in aircraft and computers surged at the end of 2013, and a partial pullback in those areas was to be expected.
Unsustainably strong business stockpiling of inventories last year returned to a more normal rate. And finally, odds are uncertainty about the introduction of Obamacare contributed to the decline in health care spending in the first quarter. Higher enrollments will eventually turn into spending gains.
With those numbers, is this the start of US economic recovery? Lets find out.
KLINCH
GDP
The result of second half of 2014 GDP data rising at about a 3% annualized rate as the expansion cycle matures and hindrances
to growth ease. Given the dismal first quarter (a -2.9% growth rate) and the likelihood that higher food and energy prices will dampen growth in the second quarter, GDP is likely to rack up only about 1.5% growth for the whole of 2014. The second- quarter GDP gain is likely to total about 2.5% (annualized).
The stage is set for much improved performance, however. Disposable income adjusted for inflation grew at a healthy 3.0% annualized rate in January through May. Consumer confidence has bounced back, climbing above its 2013 peak, and is now at its highest level since before the recession. Motor vehicle sales in May hit their highest level in eight years. And an index of manufacturing purchasing managers’ activity points to strongly expanding output. Plus, hiring is on the rise, new unemployment claims have been running at a very low rate in May and June, and retail sales have rebounded.
[table]
What’s more, there’s still a chance that growth will accelerate more dramatically in the second half of the year. Consumer spending and confidence remain way below what would be considered normal levels by the standards of past economic expansions. As job growth returns and consumers feel more secure, more robust income and spending increases may well be triggered, pushing second-half growth over the expected 3% pace. While that happening in what remains of this year is an outside chance, it’s a good bet that in 2015 such a virtuous cycle will kick in.
As for the sharp first-quarter slowdown, it isn’t quite as disheartening as it first appears. The decline doesn’t indicate a systemic weakness, and there may even be some offsetting upward bounces yet to come. Weather depressed consumption of goods and housing. Both exports, especially to China, and business investment in aircraft and computers surged at the end of 2013, and a partial pullback in those areas was to be expected.
Unsustainably strong business stockpiling of inventories last year returned to a more normal rate. And finally, odds are uncertainty about the introduction of Obamacare contributed to the decline in health care spending in the first quarter. Higher enrollments will eventually turn into spending gains.
With those numbers, is this the start of US economic recovery? Lets find out.
KLINCH