Europe is Still Under Pressure

As global markets are sizing the Euro-zone sovereign risks and the Chinese reserve requirement, the U.S. economy is giving tangible signs of recovery. The U.S. dollar, in the mean time, is finding good resistance points at current levels.


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U.S: Recovery unfolding

Bringing some order inside the troubled finances remains the main target this year in the United States and in Europe. Nevertheless, with the job market layouts having probably topped at current levels, especially in the U.S., consumer spending should rise in the coming months, albeit at a lower level compared to previous recessions. In January, consumer spending moved up by 0.5% month-on-month, more than the expected 0.4%. December and November numbers were revised up as well. The first moved to -0.1% from -0.3% and the second jumped to 2.0% from 1.8%. January’s rise was broad-based confirming that households keep on spending even after the holiday season. Sells rose 0.8% excluding auto, gasoline and building equipment. The housing market remains at contrary a corner stone of the U.S. recovery, but prices might struggle to find their way out of the bottom. Housing starts are stalling, also due to the adverse weather conditions, although the uptrend should continue. The Federal Reserve will maintain the gradual removal policy, as the initial step toward higher rates that could materialize later in the year. Policymakers still expects low growth and low inflation for the months ahead. In effect, December’s trade deficit confirms that the economic recovery is unfolding in the United States. The deficit increased to $ 40.2 billion from November’s $ 36.4 billion. Both export and import rose. The first moved up by 3.3% and the second increased by 4.8%. So, the Gross Domestic Product (GDP) might pass 3.5% this year. Core retail sales rose almost 6.0% annually in the past six months. The vast majority of key U.S. companies have overcome Q4 forecasts with profits rising on a pace of over 15% year-on-year excluding financials.


Angelo Airaghi is a Commodity Trading Advisor, registered with the National Futures Association and the Commodity Futures Trading Commission. He has been an active professional since 1990 working for major international financial companies. In the past 10 years, Angelo Airaghi has been an analyst and commentator for national and international media.

This article contains the following sections:

U.S: Recovery unfolding

EUROPE is still under pressure

GBP/USD: testing key support lines