The US dollar’s bull advance, spurred by the divergence in the monetary policy, is continuing in earnest today after briefly consolidating yesterday. The greenback traded at new multi-year highs against the euro, yen and Australian dollar. But, it is stronger against all the major currencies and emerging market currencies. The lone exceptions are the Hong Kong dollar and the Chinese yuan, which are flat.
Millions of people around the globe have become increasingly concerned about environmental changes brought about by global warming. Ironically, the brutal winter of 2014-15 is an example of this “global warming” in action. Brought about largely by carbon emissions, many are trying to find practical ways to encourage companies to reduce their carbon footprint without cutting into their bottom line.
American companies gain more confidence in the economy by adding in 295,000 jobs in February. This marks the continued addition of jobs added above the 200,000 mark for 12 months.
Liberals carrying water for the Obama administration will tout this jobs report as a major success for the president, and it is typical for every president to get his due when the economy improves. But this development comes with some drawbacks. For one thing, these jobs did not boost wages, something that forces many Americans to work two or three jobs to make ends meet.
American wages are rising at a sharply slower pace despite a rise in job gains, indicating deflationary pressures could force the Federal Reserve to delay an interest rate hike.
In last week’s employment report for February, the Bureau of Labor Statistics noted that average hourly earnings for private nonfarm payrolls rose 3 cents, or an annualized increase of 1.45%. While still positive, the growth is a sharp decline from a year ago, when hourly earnings were rising by as much as 2.5%.
The euro finished last week three standard deviations below its 20-day moving average. Even though the returns in the foreign exchange market are not normally distributed, this is a rare event, and reflected the stretched technical condition of the dollar following the stronger than expected US jobs data. After a slow start in Asia, the euro climbed from a little below $1.0825 to $1.0900, where sellers awaited.
After tense ties during the Rajapaksa administration, newly elected Sri Lankan President Maithripala Sirisena’s decision to visit India on his first overseas trip signifies a renewal in the India–Sri Lanka relationship.
The key fundamental fact that is shaping the investment climate was underscored last week. The ECB announced that it will begin its accelerated asset purchases on March 9. The following day the US reported a sufficiently robust employment report to reinvigorate expectations that the Federal Reserve will raise rates before the end of the summer.
China wants to keep its good relationship with Myanmar. But, because the major powers are also taking interest, China must work to make a strong relationship even stronger.
In recent years, as a greater focus has been placed on the environment, many have become aware of something called “The Great Pacific Garbage Patch.” It is not really that great, nor a patch, but it is made of garbage and it is in the middle of the Pacific (two out of four is not that bad), and the origin of this man made mass is quite telling about the economies of the world.
There are two main forces at work as the week winds down. The first is the ECB’s confirmation of its asset purchases. This has renewed the rally in European peripheral bond markets and re-accelerated the euro’s slide. The second is the US monthly employment report, which follows a string of relatively soft economic data.
