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US GDP Hidden Surprise Supports QE

“Key” surprises have ended up being the theme of this week. The Fed has extended the term of free money by 18-months and the door is now ajar for further QE. It’s the “when” that many appear to disagree with. It seems unlikely to be applied until after operation twist ends in June. QE2 and the ‘twist’ arrived after extensive debates and many months of weak data. In the medium term, both equities and commodities should continue to benefit from the idea that the Fed has better than even odds of performing additional QE.

US GDP, despite growing at a solid +2.8% in Q4, provided its surprise in the details. The mix of growth suggests weakness this quarter and beyond. The bulk of last quarter’s growth came from the inventory sector (+2% of the top-line). Real GDP ex-inventories were a poor +0.8%, the weakest pace in a year.

Below are some other highlights of the week:


AMERICAS

 

EUROPE Week in FX [1]

ASIA Week in FX [2]

 

WEEK AHEAD

  • CAD kicks off with its GDP
  • Manufacturing and non PMI’s come to us from CNY, GBP and USD
  • Building and Construction reports are delivered from NZD, AUD and GBP
  • The Swiss have Retail Sales and the Aussies their Trade Balance
  • Housing Price Index are presented in GBP
  • Consumer confidence is reported in the USD
  • The week is dominated by the employment situations in USD,CAD and NZD

 

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Dean Popplewell

Dean Popplewell [7]

Vice-President of Market Analysis at MarketPulse [8]
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

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