North American Wrap-Up: Frozenomics Print
Daily Forex Fundamentals | Written by | Feb 14 14 02:34 GMT

North American Wrap-Up: Frozenomics

North American Wrap-up: Frozenomics

Despite the calamitous snow storm that is wreaking havoc on the South and East coast of the US today, markets were still open and quite lively. The EUR/USD is trying hard to tackle the 1.37 figure, the USD/JPY rallied off of some early lows, and equity markets staged an impressive rally after starting the day in the red. The healthy movement on some rather disappointing US economic releases, including US Retail Sales and Weekly Jobless Claims, had people talking about the weather even more than they were to start the day.

Outside of the US, Italy's Prime Minister Enrico Letta announced that he would indeed be resigning tomorrow to make way for Italy's third straight unelected Premier, Matteo Renzi. The political turmoil has yet to make much of a dent in the euro as it had in the past, but the resignation announcement came soon after European equity markets closed up shop, so there may be some reaction yet to be had.

Circling back to the US data misses; Retail Sales was the bigger story as it fell 0.4% on the headline figure while staying stagnant at 0.0% on the Core, which excludes autos. Much of the blame for the miss on both was that January was a terrible month for weather as many areas were blanketed with the Polar Vortex and unusually high snow accumulations. Who wants to go outside when it's below zero Fahrenheit? Not me!

The finger pointing to the weather as being the culprit of economic decline brings up an interesting potential turnabout when the weather finally improves enough for people to want to go back outside. If people really are optimistic about the future of the economy but are currently held back by the cold then the urge to go out and buy things is probably pretty high right now. However, considering the weather hasn't been that much better in February so far, we might have to wait till March before that pent up consumerist energy is able to be expended.

Looking Forward

The only perceivable event risk this evening comes from a speech by the Reserve Bank of Australia's Assistant Governor Christopher Kent at a club event in Sydney. Kent may have to answer some questions about the RBA's recent policy stance from dovish to neutral on the heels of last night's Employment disappointment, but most likely he will continue to tow the company line that they are more forward looking and one report doesn't make an economy. We believe this may calm the nerves of some anxious Aussie bulls and could create room to rally for the currency.


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