U.S. Data Shows Improving Economy

In what could be perceived as a massive boost to bullish market participants, yesterday’s U.S trade balance data showed an improving economy, offering investors reassurance that the Federal Reserve's decision to taper its asset buying was justified by fundamentals. Minutes of the Fed's December meeting are due later on today and markets will be hoping for a clear commitment to keeping rates low for a long time to come.

The dollar climbed against the yen after the U.S. trade deficit shrank to its lowest in four years, thanks mainly to a renaissance in energy production, prompting analysts to revise up forecasts for economic growth. Investors are now expecting the International Monetary Fund to raise its global growth forecast in about 3 weeks.

An ADP national employment report released today at 13:15 is expected to show that private payrolls in the U.S rose by 200,000 workers last month, acting as further encouragement for U.S investors and will be seen as an early indicator for Fridays Non-Farm data.

– Max Cohen

PM Analysis
Fears of a housing bubble were raised again this morning

Fears of a housing bubble were raised again this morning as a Bank of England survey reveals that mortgage demand has risen at the quickest pace in six years.  The driving factor in this surge has been attributed to promotions by lenders and the governments Help to Buy schemes.  With house pricing rising 5.5% across the UK for the year to October compared to 12% in the capital has stoked investor’s fear that a bubble is forming in the capital.

US futures were down ahead of the open after snapping a three-day slump yesterday, with ADP non-farm employment change coming in considerably better than forecast at 238k as opposed to the forecast 199k; this figure has yet to prove a boost to the futures.  Instead fear of accelerated tapering has led to a slight sell-off this can be seen further by the strengthening of the dollar since the figure.

– Alex Conroy

The original articles by Spreadex can be found here.

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