A Load of Debt Leaves the Dollar in Danger

A key fed official says the US should keep its growing debt load in mind as it plans to increase government spending.

The US Should Watch Its Debt Before “Things Get Out of Hand”

Loretta Mester, president of the Federal Reserve Bank of Cleveland, says the US needs to watch its growing debt pile. In her view the country’s national debt load is on the verge of “getting out of hand”. According to data from GAO, the General Accounting Office, the US national public debt is already sitting at 75% and expected to double over the next 30 years as government spending continues to grow. The International Monetary Fund says the US is the only advanced economy in which debt-to-GDP is expected to grow in the next 5 years.
“I think we have to be taking into account the health of U.S. economy, in terms of are we on a sustained fiscal path?” Mester replied. “And I do think that’s something we should be thinking of now as we go forward, and not waiting till things get too far out of hand.”
What affect did this have on the dollar? Not very much. The world’s reserve currency continued to fall versus a basket of world currencies on inflation data and interest rate expectations. The USD/EUR moved up to test for resistance at the 1.2000 level, extending a bounce that formed last week. The pair appears to be in full reversal but that is not confirmed in the charts yet. The indicators are both consistent with reversal, but momentum has not shifted to the upside. A move above 1.2000 would be bullish and likely take the pair up to the 1.2100 level near term.
EUR/USD
The USD lost some ground to the British pound as well. The GBP/USD moved up to test resistance at the top of its near-term consolidation range just above 1.36000. The indicators are suggestive of reversal with stochastic forming a bullish crossover and MACD not far behind, but the move is not confirmed. A move in prices above 1.36000 with a close at the new high would be bullish. This week there is a load of US data, but none will give much indication about inflation while in the UK economic news will be dominated by employment data later in the week.
GBP/USD moved up
The dollar was able to make up some ground versus the Japanese yen, but the gain was small and left the pair trending within a near-term price pattern that is beginning to take on the look of a double top. The top is forming at 110.00 and has been touched twice. The pair has retreated from the tops but not yet broken support although that looks likely.
USD/JPY
Both MACD and stochastic have diverged from the high and formed bearish crossovers which suggest lower prices are on the way. A break below support at 108.70 would be bearish. Later this week Japanese GDP figures are due out; a hot number could help send this pair down to stronger support levels.

Comments

Post a Comment

Popular posts from this blog

Manchester Citymidfielder Yaya Toure was subjected to noises that sounded like monkey chanting as his side faced CSKA Moscow in Russia on Wednesday. City have confirmed that they intend to submit an official complaint to UEFA over the alleged abuse, and a club official even spoke to the match delegate from the organisation after the match at the Arena Khimki with a written complaint to follow. Toure spoke of his sadness over the matter at the end of the game after he appeared to point to referee Ovidiu Hategan to identify specific sections of the CSKA supporters who were allegedly abusing him. The midfielder has been widely commended for his inspirational and dignified response to the incidents and in reporting what happened via social media and interviews. The Ivory Coast international told Sky Sports: "It is quite disappointing when you're talking about people continuing to do that. "It is unbelievable and very sad on my part. "I think UEFA need to do something strong. It would be nice if we could stop that. "Some of the songs today were quite stupid and I think UEFA has to do the work. "Every time we say something it continues, something has to be done to stop it." The papers were full of praise for the way that the City star reactedto the reported abuse and spoke with such 'strength' and 'class' after the match. Toure Tweeted after the match: "Thank you for your support! Hate or racism cannot affect me when so many people are showing me love and support on a daily basis! "I believe in football institutions, I know decision makers will take their responsibilties and show A RED CARD TO RACISM." Thank you for your support! Hate or racism cannot affect me when so many people are showing me love and support on a daily basis! — yaya toure (@Toure_yaya42) October 23, 2013 I believe in football institutions, I know decision makers will take their responsibilties and show A RED CARD TO RACISM — yaya toure (@Toure_yaya42) October 23, 2013 There was a great deal of support for Toure on social media with many fans keen to say how impressed they were with his conduct throughout. Yaya Toure extremely dignified, mature & sensible talking about racist chants. Class act — Alex Kunawicz (@AlexKunawicz) October 23, 2013 Dignified response from Yaya Toure in the face of blatant racism from CSKA fans, calling it 'disappointing'! Disgusting is more appropriate! — Michael McCarthy (@mkmccarthy1989) October 23, 2013 The incident comes 18 months after Porto were fined £16,700 by UEFA after their fans racially abused Mario Balotelli during a Europa League clash against City in February 2012. City also lodged an official complaint on that occasion, when monkey-chanting had been prolonged and widespread. Controversially, City were later fined £24,740 for delaying the kick-off of the second half of that same game by one minute. All eyes will now be on UEFA to see if they react strongly enough to this most recent episode.

Read more

Why Texas is labeled Canada on this map of the ‘ridiculously large’ U.S. economy

Image
Much has been made of the size of California’s massive economy, but it’s hard to truly wrap one’s brain around its place on the global stage. That’s where Mark Perry comes in. The University of Michigan economics and finance professor put it in perspective with one eye-popping statistic, in particular: California’s gross domestic product of $2.75 trillion in 2017 basically matches that of the U.K., and it achieves this with 19.3 million workers, vs. Great Britain’s 33.8 million. “Amazingly, it required a labor force 75% larger (and 14.5 million more people) in the U.K. to produce the same economic output last year as California!” Perry wrote . “That’s a testament to the superior, world-class productivity of the American worker.” But California isn’t the only state that towers over much of the world as an economic engine. Perry illustrated the overall dominance by matching the GDP for each state in 2017 to a foreign country with a comparable nominal GDP: Other notable examp...
Read more

Xapo: Where Billionaires Store Their Keys

Argentine entrepreneur Wences Casares spent years trying to convince Silicon Valley millionaires and billionaires that Bitcoin was the global currency of the future, that they needed to buy some, and that he’s the man to safeguard it. His startup, Xapo, has built a network of underground vaults on five continents, including one in a decommissioned Swiss military bunker. “Everyone who isn’t keeping keys themselves is keeping them with Xapo,” said Ryan Radloff of CoinShares, which has more than $500 million of Bitcoin stored at Xapo. “You couldn’t pay me to keep it with a bank.” Xapo’s billionaire backers include LinkedIn Corp. co-founder Reid Hoffman and former Wall Street trader Mike Novogratz, who’s in the process of setting up his own cryptocurrency merchant bank. Their bet is that Bitcoin is here to stay, and so is its biggest scourge, theft. The first and most important rule of owning Bitcoin is to securely keep your private key — the code that lets you spend your coins....
Read more