USD Sold on Growth ConcernsOctober 17, 2013 Posted by: Joe O'Leary
The USD fell on concern the US debt debate will hamper growth. The USD also came under selling pressure after the Chinese rating agency Dagong downgraded US sovereign to A- from A earlier today. Although Dagong is a only a small rating agency, this highlighted market concerns about a potential US downgrade by Fitch Ratings. The agency has recently put the US rating on negative outlook. A potential downgrade could have broader implications for USD and markets. The USD was sold across the board. The USD index is down over .7% to below 80. In addition, The GBP was helped as UK retail sales were stronger than expected, up 0.6% (consensus 0.4% ), YoY up 2.2% (consensus 2.0%). Much US economic data has been postponed due to shut down.
• US initial jobless claims fell 15k to 358k (median 342k) for the week-ended October 12.
• U.K. September retail sales beat expectations at +0.6% m/m and +2.2% y/y. Both ourselves and the market consensus had forecast a +0.3% m/m outcome, but sales rebounded from a disappointing August (-0.9% m/m) more than anticipated.
• Market believes the Fed won't taper before Yellen takes over as chair.
• German institutes cut growth forecast for this year to 0.4% from 0.8% expected previously.
• Fitch placed the U.S. AAA rating on "watch negative" as authorities "haven’t raised the debt ceiling in a timely manner."
10/18 USD: Industrial Production (Sept.)
10/18 CAD: CPI (Sept.)
10/21 JPY: Trade Balance (Sept.)
10/21 USD: Existing Home Sales (Sept.)
10/21 USD: Leading Index (Sept.)
10/22 CAD: Retail Sales Reports (Sept.)
10/23 EUR: Consumer Confidence (Oct.)
10/23 USD: MBA mortgage Applications (Oct 18)
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