Another economical day emerges on the world’s leading economy; whereas recovery aspects are starting to show, filling markets with optimism that continue to mount on investor’s minds, after the Federal Reserve released its Beige Book.
The Beige Book stated yesterday that the worst credit crunch since the Great Depression is finally coming to an end and that the recovery process has started already in the U.S economy; as improvement was seen throughout most Districts and the country in overall.
However, investor’s will still need to focus on rising threats such as inflationary risks over the long term, due to the massive amount of money pumped into the financial system, not to forget as well rising Unemployment Rate along with tough credit condition. But the Fed’s assured markets that inflationary levels will not be an issue at the time being and should not pose a threat to economical recovery, as lower demand and rising inventories along with flat retail sales, continues to hammer down on prices; therefore inflation will continue to hover around at the desired levels for the time being.
The bigger issue will remain with rising unemployment, along with tight credit conditions; which both suffocate personal income, thus making it hard for consumers to boost their spending, and as we know that Spending accounts for nearly 2/3 of the U.S GDP, thus if growth comes in the third quarter it will be weak and subdued.
As for today’s news; the major fundamentals to be released will be the U.S Trade Balance, which continued to show a widened deficit, as lower global demand hammers down onto the U.S economy severely; whereas expectations believe that the deficit will widen to reach $27.3 billion in the month of July, compared with the previous $27.0 billion deficit reported back in June.
In addition, the EIA report will come out one day after the Organization of Petroleum Exporting Countries (OPEC); met yesterday in Vienna and announced that they see the price of crude oil between $70 - $80 a barrel, a very reasonable price in order to expand their investments; therefore OPEC ministers declared that they will preserve the current production levels at 24.845 million barrel per day.
Therefore analysts expect that Crude oil inventories in the united states will decline by -1.5 million barrel from last week; from the previous -0.4 million barrel decline, which shows that analysts expect that demand level on energy will rise, as better economical conditions throughout the world have recently been seen.
Moving to the Canadian Economy; the Major fundamental released will be the Rate Decision from the Central Bank of Canada, but it wont have any effect on markets, since markets know that the BoC will keep the current interest rates at their levels set at 0.25%; therefore economist’s will not look any effect on markets from that report, due to the fact that the U.S economy and the Canadian economy are bounded together, where Canada is expected to follow its peer into recovery by the end of this year.
