{"id":646853,"date":"2013-03-14T06:52:31","date_gmt":"2013-03-14T10:52:31","guid":{"rendered":"http:\/\/blogs.reuters.com\/globalinvesting\/?p=8810"},"modified":"2013-03-14T06:52:31","modified_gmt":"2013-03-14T10:52:31","slug":"weekly-radar-dollar-building-steam","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/646853","title":{"rendered":"Weekly Radar: Dollar building steam?"},"content":{"rendered":"

FOMC\/FRANCO-GERMAN SUMMIT\/GERMAN-FRENCH-SPAIN AUCTIONS\/GLOBAL FLASH PMIS FOR MARCH\/UK BUDGET-JOBS-CPI-BOE MINS\/ICC HEARING ON KENYATTA\/SAFRICA RATES
\n<\/strong><\/p>\n

\u00a0\u00a0\u00a0\u00a0<\/strong>\u00a0\u00a0 The revved-up U.S. dollar – whose trade-weighted index is now up almost 5 percent in just six weeks<\/a> \u2013 could well develop into one of the financial market stories of the year as the cyclical jump the United States has over the rest of G10 combines with growing attention being paid to the country\u2019s potential \u201cre-industrialisation\u201d<\/a>. As with all things FX, there\u2019s a zillion \u2018ifs\u2019 and \u2018buts\u2019 to the argument. Chief among them is many people\u2019s assumption the Fed will be printing greenbacks well after this expansion takes hold as it targets a much lower jobless rate. Others doubt the much-vaunted return of the US Inc. back down the value chain into metal-bashing and manufacturing, while some feel the cheaper energy from the shale revolution and the lower structural trade deficits that promises will be short-lived as others catch up. However, with the dollar already super competitive (it\u2019s down 30-40 percent on the Fed\u2019s inflation-adjusted index over the past 10 years) the first set of arguments are more tempting. Even if you see the merits in both sides, the bull case clearly has not yet been discounted and may have further to go just to match the balance of risks.\u00a0 With Fed printing presses still on full throttle, this has been a slow burner to date and it may be a while yet before it gets up a head of steam — many feel it\u2019s still more of a 2nd<\/sup> half of 2013 story and the dollar index needs to get above last year\u2019s highs to get people excited. But if it does keep motoring, it has a potentially dramatic impact on the investment landscape and not necessarily a benign one, even if shifting correlations and the broader macro landscape show this is not the ‘stress trade’ of the short-lived dollar bounces of the past five years.<\/p>\n

Commodities priced in dollars could well feel the heat from a steady dollar uptrend. And if gold\u2019s spiral higher over the past six years has been in part due to the \u201cdollar debasement\u201d trade, then its recent sharp retreat may be less puzzling . Emerging market currencies pegged to the dollar will also feel the pressure as well as countries and companies who\u2019ve borrowed heavily in greenbacks. The prospect of a higher dollar also has a major impact on domestic US investors willingness to go overseas, casting questions on countries with big current account gaps. As the dominant world reserve currency, a rising dollar effectively tightens financial conditions for everyone else and we\u2019ve been used to a weakening one for a very long time.<\/p>\n

Back to moment, stock markets around the world have continued to nudge new highs over the past week, with the upbeat US employment data underlining a still broadly positive global growth tilt even if Chinese data was more equivocal and Europe still looks dour. That said, at least the euro FX rate is going in the right direction for a change to help address the regional funk.<\/p>\n

To keep a tally, global stocks are up almost 6 percent as the first quarter enters its final fortnight.<\/p>\n

Next week, it will be hard to get beyond the FOMC and a heavy US data slate, though flash global PMIs for March will be critical in seeing whether the wobble in world business sentiment last month was a blip or a trend. The Franco-German summit in Berlin on Monday will be interesting to parse any new direction in euro policy and cooperation, with German\/French and Spanish debt auctions throughout the week. Otherwise, it\u2019s big five days for the UK economy with the government\u2019s 2013 budget as well as jobless\/inflation\/retail\/govt borrowing reports and BoE minutes . An ICC hearing on Kenyan election victor Kenyatta in the Hague on Monday will also need watching, with the latest South African rate decision on Wednesday a big moment next week in regional markets there.<\/p>\n

 <\/p>\n

Events and data to watch next week:<\/p>\n

China annual parliament meeting ends Sun<\/strong><\/p>\n

Merkel\/Hollande summit Berlin Mon<\/strong><\/p>\n

ICC hearing on Kenya\u2019s Kenyatta, The Hague Mon<\/strong><\/p>\n

EZ Jan trade Mon<\/strong><\/p>\n

UK Feb inflation Tues<\/strong><\/p>\n

German March ZEW Tues<\/strong><\/p>\n

US Feb housing starts\/permits Tues<\/strong><\/p>\n

German 10-yr bund auction Weds<\/strong><\/p>\n

UK Feb jobless Weds<\/strong><\/p>\n

EZ March consumer confidence Weds<\/strong><\/p>\n

UK 2013 budget Weds<\/strong><\/p>\n

BoE minutes Weds<\/strong><\/p>\n

EU\u2019s Rehn at EU Parliament Committe Weds<\/strong><\/p>\n

FOMC decision\/presser Weds<\/strong><\/p>\n

Obama visits Israel Weds<\/strong><\/p>\n

SAfrica\/Iceland rate decisions Weds<\/strong><\/p>\n

Japan Feb trade Thurs<\/strong><\/p>\n

Global flash March PMIs Thurs<\/strong><\/p>\n

UK Feb retail sales\/govt borrowing Thurs<\/strong><\/p>\n

French\/Spanish bond auctions Thurs<\/strong><\/p>\n

US\/UK index-linked bond auctions Thurs<\/strong><\/p>\n

Egypt rate decision Thurs<\/strong><\/p>\n

US March Philly Fed index\/Feb existing home sales Thursday<\/strong><\/p>\n

German March Ifo\/French March biz climate Fri<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

FOMC\/FRANCO-GERMAN SUMMIT\/GERMAN-FRENCH-SPAIN AUCTIONS\/GLOBAL FLASH PMIS FOR MARCH\/UK BUDGET-JOBS-CPI-BOE MINS\/ICC HEARING ON KENYATTA\/SAFRICA RATES \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The revved-up U.S. dollar – whose trade-weighted index is now up almost 5 percent in just six weeks \u2013 could well develop into one of the financial market stories of the year as the cyclical jump the United States has over […]<\/p>\n","protected":false},"author":7385,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-646853","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/646853","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/7385"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=646853"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/646853\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=646853"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=646853"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=646853"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}