By: Mike Campbell
The Chairman of the Federal Reserve has been stating his view that the US economic recovery is underway for some time now. Whilst agreeing that it would be premature to remove the various fiscal support and stimulus measures that are in place, global leaders at the recent G20 meeting, also exuded the same confidence. But some people are not so sure.
The US Consumer Confidence Index (CCI) had risen in August to a value of 54.5, but the latest value had slipped back to 53.1. Many economists thought the index would rise again on the back of political and Fed optimism. A CCI value of 90 is taken to be indicative of a healthy economy. The index is a critical barometer for the US economy since 70% of US economic activity stems from personal spending. The decline has been attributed to a less favourable consumer opinion about the labour market and current business conditions. Bernanke warned that more job losses were inevitable whilst the economy recovered, after all.
Housing was at the centre of the sub-prime storm that triggered the global recession. Data from the Case-Shiller Home price Index suggests that home prices have stabilised and are beginning to recover. Whilst the year-on-year figure was down by 13.8%, the price rose by 1.6% over the June figure. Of course, if employment levels do take a substantial hit over the next few months, it is likely that this increase will reverse as demand flounders.
The Greenback came off an eight month low (88.23) against the Yen yesterday on the back of comments by Japan’s finance minister, Mr Fuji, who reversed his position and indicated that Japan would intercede in the currency markets “"If [exchange rates] move abnormally”. The Dollar closed at 89.98 against the Yen.
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Live Rates
| Symbol | Change | High | Low |
|---|
| EUR/USD | 0.0011 | 1.3283 | 1.32 |
|---|---|---|---|
| AUD/USD | 0.0061 | 1.0777 | 1.0684 |
| EUR/GBP | 0.0002 | 0.8401 | 0.8368 |
| EUR/JPY | -0.04 | 103.17 | 102.28 |
| GBP/USD | 0.0007 | 1.5826 | 1.5761 |
| USD/CAD | -0.0021 | 1.0015 | 0.9975 |
| USD/CHF | -0.0007 | 0.9159 | 0.9106 |
| USD/JPY | -0.06 | 77.77 | 77.41 |
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