US market: Data continues to paint a mixed picture

Matthew Ryan, CFA Ebury

While market focus has moved away from macroeconomic data and monetary policy, last week was full on both fronts. Data continues to paint a mixed picture.

The housing market is performing particularly poorly, while the jobs market has continued to show signs of a moderate cooling, notably in the weekly jobless claims figures. Other indicators are holding up somewhat better, and the Atlanta Fed GDPNow estimate is currently pointing to a strong rebound in US growth in the second quarter of around 3.5% annualised.

The Federal Reserve acknowledged this uncertainty during its latest policy meeting last week.

The Fed funds rate was kept unchanged, as was universally expected, although the FOMC sounded a slightly more hawkish note than had been priced in, with Chair Powell again describing the US economy and labour market as “solid”, while he brushed aside the soft May CPI report.

However, recent weakness in labour market data is prompting some policymakers to veer towards an earlier cut. We do not think any of these dichotomies will be resolved until we get at least one more data point on payrolls and inflation.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

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