Here’s a great dissection by Wall Street Journal of the press release from the FOMC meeting today.
(Click on the image to enlarge)
Tuesday, May 9
Does anybody still like the dollar?
Check out the economic data from the U.S. that came out within the past two weeks. Pay attention to the repetitive theme. (Hint: compare actual numbers versus the forecast)
Consumer confidence unexpectedly rose to 109.6, its highest level in almost four years.
The existing home sales came out with a positive surprise. The market had expected it to fall but it actually rose.
Durable goods orders increased 6.1% led by a strong demand for electronics, airplanes, and machinery. The increase in new orders was the largest since last May and blew away the 2.1% gain that was expected.
GDP which narrowly missed expectations still surged to an annual rate of 4.8%, its best performance in more than two years.
Personal income rose higher than expected. This suggests that consumers still have the muscle to power further economic expansion.
Personal spending also rose higher than expected. Consumers are still happy to open their wallets.
Construction spending jumped 0.9%, more that twice expectations. Total construction spending climbed to $1.2 trillion, on annualized basis, surpassing the previous record high set in February.
The ISM manufacturing index rose 2.1 points to 57.3, the highest reading since last October.
New orders at U.S. factories rose a stronger-than-expected 4.2%. This gain was the highest since last May.
The ISM service index rose 2.5 points to 63.0, the highest since August.
While the nonfarm payrolls failed to meet market expectations, the report was hardly weak rising 138,000 while the unemployment remain unchanged at 4.7%.
Average hourly earnings jumped 0.5% bringing the year/year rate to +3.8%, the high since late 2002.
Almost every piece of economic data coming out of the U.S. for the past two weeks came out stronger-than-expected or reached new highs. I would have expected the dollar to stregthen, but look at how the major currency pairs performed:
The euro and the pound pairs actually skyrocketed, while the yen and swissy pairs plummeted. Even with all the spectacular data that came out, it seems nobody wants the dollar.