Forex Trading – USD/JPY As Japan’s Fiscal Year End Approaches

Forex News Personal Spending +0.1, Income +0.5%. PCE lower than expected

The Personal Income came in higher than expected this month, but consumers did not spend the extra income.  Income rose 0.5% while spending rose by a small 0.1% -the sloweet pace since September 2006.  I guess people are using the extra income to pay off the debt burden or increase savings for a rainy day. 

Consumer spending accounts for over 2/3rds of US GDP.  The first two months of 2008 have shown gains of 0.4% and 0.1%.  As a reference for comparison, in the last quarter of 2007, when GDP growth was 0.6%, the spending increases on a MoM basis showed increases of 0.3%, 1.0% and 0.2%.

PCE came in at 3.4% year on year but the core measure which the Fed watches cloesly, rose by 2.0% on a YoY basis.  This is better than expecatitions and near the low of the range.  Now if we could only ignore Food and Energy costs?

Bobby’s Corner-Market Open 3.28.2008

Thursday 3/28/08

Good Morning:
The greenback is poised to end the weak on a lower note.

Speculation that the FED will need to cut interest rates further to avert a recession, added steam to an already weakened dollar.

World equity markets were mixed-Asian markets were higher, and European indexes were stable.
US futures point to a higher opening as Citigroup upgraded Lehman Brothers to a “buy” from “hold”.

Gold: $ 950.70     |     Oil: $ 106.70

Data this Morning:
Personal Income Actual + .5% Expected +.3%
Personal Spending: Actual .1% Expected .3%
U Of Michigan Confidence at 10 AM – Expected 70.0 Prior: 70.5

Have a GREAT DAY and a GREAT WEEKEND

Forex News; Feds Plosser on the wires

•  INFLATION IS A REAL PHENOMENON
•  AS ECONOMY WEAKENS, REAL RATES NEED TO FALL
•  FED HAS BEEN FORWARD LOOKING
•  FED HAS TO BE FORWARD-LOOKING
•  US MONETARY POLICY IS CHALLENGING
•  FED HAS TO PROTECT ITS CREDIBILITY
•  FED NEEDS TO BE CAUTIOUS GOING FORWARD
•  FED RATE CUTS ALREADY TOTAL 300 BASIS POINTS

Analysis: Sounding cautious about future Fed cuts.

Forex News ECB Mersch on the wires

• ECB WILL DO WHAT IS NEEDED FOR MKT TO FUNCTION
• MONEY-MKT SITUATION A CONCERN
• KEEPING YUAN WEAK IS NOT IN CHINAS BEST INTEREST

Forex News University of Michigan Consumer Sentiment

The final release for the day will be the University of Michigan Confidence measure for March.  The Preliminary release for this statistic came out on March 14^th.  At the time the index decreased from 70.8 in February to 70.5 in March.  The level represented the lowest reading since February 1992.  Record gas prices and a weaker employment picture undermined consumer sentiment. The final release is expected to show a decline to 70.0. 

Forex News PCE Deflator and Core PCE to be released at 8:30 AM

Also released at 8:30 AM, the US Core Personal Consumption Expenditure Price Index is to be announced.  This index measures the rate of inflation experienced by consumers when purchasing goods and services, excluding Food and Energy.  Food and Energy account for roughly 25% of PCE, but they can be very volatile from month to month and can distort the overall picture. PCE ex food and energy, is thought to be the best indicator of the underlying inflation trend.  The Fed looks at this index as a measure of inflation experienced by the consumer in the US. Last month the Headline PCE rose at a 3.7% annual pace.  The core measure remained at a lower 2.2%.  This month the expectations are for the PCE deflator to decline to a rise of 3.5% on an annualized basis.  The core is expected to show a modest decline to 2.1%.  On a month on month basis, the expectations are for the core to show a small gain of 0.1%.  This is down from the 0.3% gain last month. 

Forex News US Personal Income and Consumption to be released

On Friday, another relatively minor release that has taken on greater importance is the Personal Spending and Income for the US.  This will be announced at 8;30 am.   The consumer accounts for 70% of the US GDP and with the debate about recession-no recession being of importance, a timely indication of consumer spending does take on added significance.   Last month Consumer spending rose by 0.4% while incomes rose by a lesser 0.3%.  This month the expectations are for spending to slow to 0.1% and incomes to remain at plus 0.3%.  Economists expect that the trend in spending to remain low as inflation and declining consumer balance sheets from a falling equity and housing market, take its toll.