(menafn – ecpulse)
U.S. markets witnessed a positive week concerning economic releases, as President Obama sighted the economy in his yearly State of the Union address, alongside gyrating currency exchange rates. The week’s data provided a promising outlook for the U.S. economy during this quarter amidst the predominant fiscal uncertainty over the national debt, after having suffered from a contraction in the prior quarter, starting with a significant decrease in U.S. weekly jobless claims by 27 thousand as reported by the Labor Department.
Followed was the surprising improvement in the manufacturing sector, as the Federal Reserve of New York reported an upturn in manufacturing activity in New York after six straight months of contraction as the Empire State manufacturing index advanced to 10.04 in January, from minus 7.78 in December.
Last Friday saw the release of the Michigan Confidence survey, which showed a remarkable improvement in consumer confidence for February, as the index’s preliminary reading entailed a rise to 76.3, from 73.8 in January.
Moreover, on Tuesday’s State of the Union speech, Obama delivered a batch of proposals for the U.S. economy, in regards of employment, immigration reform, gun control, and national debt. Obama proposed to increase the minimum federal wage to 9 per hour, from 7.25, as well as a spending plan of 50 billion for infrastructure.
Obama called for a “balanced approach” to closing the deficit including spending cuts and tax increases; although Republicans emphasized that the talks over tax hikes are over.
Separately, global currencies exchange markets had seen a volatile week as speculation of a currency war has emerged, partly the steep fall of the Japanese yen after the Bank of Japan’s massive accommodative monetary policies.
The Group of Seven major nations released a statement last week that they will not target exchange rates with their policies, and that stimulus monetary policies should be aimed at economic recovery.
Markets reacted to the statement which saw the Yen fall even further, especially as Japan’s officials stated that the policy of G-7 integrates Japan’s own policy, however, a G-7 official commented that the Group meant otherwise and markets misinterpreted their statement
The G-7 official’s comments were echoed by sustained strength for the Japanese currency against the U.S. dollar and the Euro. Investors await the outcome of the Group of Twenty two-day meeting on Saturday.
Moreover, the Euro took a downturn around mid-week against other major currencies after data from the Eurozone showed a deeper than thought recession, sparking speculations around another interest rate cut by the European Central Bank.
