Weakness of the US Economy has Undermined the Greenback - BBH
Research Team at BBH, suggests that the weakness of the US economy and
the caution by the Federal Reserve to raise rates again after the
December lift-off has undermined the greenback.
Key Quotes
“Following
the drawdown in February wholesale inventories reported on April 8, the
Atlanta Fed GDPNOW tracker slashed its Q1 estimate to 0.1%, sending the
doomsayers in the traditional media and blogosphere chattering with the
"told you so" rants. One must have been born with the morning dew to
get so worked up by the news. In recent years, Q1 GDP has typically
been exceptionally weak.
Between 2010 through 2015, the US
economy averaged 0.75% growth at an annualized rate in the first
quarter. Growth in the remainder of the year averaged around 2.5%.
Except in the first quarter of 2012, the US economic performance in the
first three months of the year has been the worst of the calendar year.
There have been various attempts to explain this pattern, but the key
takeaway for investors is to get over it because the economy will.
In
fact, meeting demand from inventories will set the stage stronger
growth again in the coming months. Households, which drive more than
2/3 of the economy through consumption, are in a better fiscal position
in aggregate. The savings rate has risen. Revolving credit (credit
card) growth is modest.”
(Market News Provided by FXstreet)
