US recession risks: what is the data telling us? - TD Securities

Eren Sengezer FXStreet

"The recent souring of some financial and survey indicators has fanned fears of a US recession," note TD Securities analysts.

Key quotes

"While "long-leading" financial indicators like the yield curve are suggesting greater-than-even odds of a recession, coincident economic data and leading indicators point to no imminent danger."

"Regime-change models assign low probabilities of the US economy currently being in recession as GDP growth, employment, and other indicators remain healthy. However, with business investment slowing, the onus remains on the consumer to keep the economy going."

"While economic data continues to point to low odds of a recession, we expect the FOMC to act in a preemptive fashion as the risks to the outlook remain asymmetric. We are looking for another 25bp cut by the Fed this week, as part of its mid-cycle adjustment."

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD faces next resistance near 1.1930

EUR/USD continues to build on its recovery in the latter part of Wednesday’s session, with upside momentum accelerating as the pair retargets the key 1.1900 barrier amid a further loss of traction in the US Dollar. Attention now shifts squarely to the US data docket, with labour market figures and the always influential CPI releases due on Thursday and Friday, respectively.

GBP/USD sticks to the bullish tone near 1.3660

GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.

Gold holds on to higher ground ahead of the next catalyst

Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of modest losses in the US Dollar and despite firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.