Dollar Depreciates in November

Dec. 6, 2006

The average monthly value for the trade-weighted dollar index of 15 major currencies tracked by the Federal Reserve Bank of Atlanta fell 0.7 percent in November from the previous month. All subindexes declined in November except for the Americas subindex, which gained 0.5 percent. The Europe subindex dropped 2 percent, and the Pacific and the Pacific-excluding-Japan measures were down 1.1 percent each. The classic subindex, which is the analogue of the original Atlanta index, was 0.8 percent lower in November. The overall index in November was 4 percent below its year-ago level. On a daily basis, the overall index was down 0.6 percent at the end of November from its reading at the end of October and was 4.6 percent below its level at the end of November 2005.

The Atlanta Fed index is based on 1995–97 bilateral trade weights for 15 currencies. The European subindex includes the European Monetary Union, Switzerland and the United Kingdom. The Pacific subindex includes Australia, China, Hong Kong, Japan, Malaysia, Singapore, South Korea and Taiwan. The Americas subindex includes Brazil, Canada and Mexico. The overall dollar index includes the Saudi Arabian riyal along with the foregoing 14 currencies. The classic subindex includes the European Monetary Union, Switzerland, the United Kingdom, Australia, China, Hong Kong, Japan, Singapore, South Korea, Taiwan, Saudi Arabia and Canada. All figures are indexes and not actual exchange rates. A rise in the index or subindex reflects a strengthening of the dollar against currencies included.

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chart for US DOLLAR INDEX
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Reference:-

1. The Dollar Crisis, the Book that recommended to be read.

2. The US national Debts.

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Global Business Cycle Indicators

Monday, November 20, 2006

The Conference Board announced today that the U.S. leading index increased 0.2 percent, the coincident index increased 0.1 percent and the lagging index increased 0.2 percent in October.
The leading index increased again in October, and there was an upward revision to September's small increase. From April to October, the leading index fell by 0.2 percent (a -0.4 percent annual rate). Housing permits continued to make the largest negative contribution to the leading index in this period, followed by vendor performance, offsetting large positive contributions from real money supply (M2) and consumer expectations. Strengths and weaknesses have been roughly balanced among the leading indicators in recent months.
The coincident index increased in October, and September's unchanged value was revised upward as a result of data revisions in all its components. This measure of current economic activity has been increasing steadily since September 2005, although its growth moderated in recent months. From April to October, the coincident index grew 1.0 percent (a 2.0 percent annual rate).
The leading index has been fluctuating around a slightly downward short-term trend in recent months, with increases in September and October, but declines in July and August. As a result, it has fallen 0.6 percent below its most recent high reached in January. At the same time, real GDP growth slowed to a 1.6 percent (annual) rate in the third quarter, following a 5.6 percent gain in the first quarter and a 2.6 percent gain in the second quarter. The current behavior of the leading index suggests that slow economic growth is likely to continue in the near term.

LEADING INDICATORS
Six of the ten indicators that make up the leading index increased in October. The positive contributors - beginning with the largest positive contributor - were real money supply*, index of consumer expectations, stock prices, average weekly manufacturing hours, manufacturers' new orders for consumer goods and materials*, and average weekly initial claims for unemployment insurance (inverted). The negative contributors - beginning with the largest negative contributor - were vendor performance, building permits, manufacturers' new orders for nondefense capital goods*, and the interest rate spread.
The leading index now stands at 138.3 (1996=100). Based on revised data, this index increased 0.4 percent in September and decreased 0.3 percent in August. During the six-month span through October, the leading index decreased 0.2 percent, with five out of ten components advancing (diffusion index, six-month span equals fifty-five percent).

COINCIDENT INDICATORS
Three of the four indicators that make up the coincident index increased in October. The positive contributors to the index - beginning with the largest positive contributor - were employees on nonagricultural payrolls, industrial production, and manufacturing and trade sales*. Personal income, less transfer payments remained the same.
The coincident index now stands at 123.7 (1996=100). This index increased 0.2 percent in September and increased 0.2 percent in August. During the six-month period through October, the coincident index increased 1.0 percent.

LAGGING INDICATORS
The lagging index stands at 124.1 (1996=100) in October, with three of the seven components advancing. The positive contributors to the index - beginning with the largest positive contributor - were average duration of unemployment (inverted), change in labor cost per unit of output*, and ratio of consumer installment credit to personal income*. The negative contributors - beginning with the largest negative contributor - were commercial and industrial loans outstanding* and change in CPI for services. The ratio of manufacturing and trade inventories to sales* and average prime rate charged by banks* held steady in October. Based on revised data, the lagging index increased 0.2 percent in September and remained unchanged in August.

Housing Starts and Building Permits (Bureau of the Census)

Friday, November 17, 2006


8:30 AM Housing Starts and Building Permits (Bureau of the Census)
This may be the big report of the week. And it may show that housing starts, after dropping from a 2 million start rate, are settling in at something closer to 1.7 million. Thus, housing starts have cooled but are not continuing to fall sharply. And that may be a signal that the overall economy, having cooled off, is beginning to settle in at a more modest pace of activity, but not continuing to cool further.

By the End of the Week
The overall sense from another week of data may be that the economy has cooled but isn't continuing to lose steam. Elsewhere around the globe, the news is more about inflation than economic growth. Lower energy prices help limit the inflation potential. But that is not the only reason why retail inflation has eased a little in China, while wholesale prices fell in October in the U.K. and in Japan — for the first time in a year. Unfortunately, the latter is tied to a small dip in industrial output and overall economic growth. Still, the overall sense from the economic data is a little more positive now than a month or two ago. And that is being reflected in the latest releases for the Leading Economic Indicators as well.

8:30 AM Consumer Price Index (Bureau of Labor Statistics)

Thursday, November 16, 2006

8:30 AM Consumer Price Index (Bureau of Labor Statistics)
Lower gasoline prices will be reflected in this number. The "core" data (which excludes food and energy) may show a 0.2-to-0.3 percent rise.

9:15 AM Industrial Production (Federal Reserve Board)
Based on hours worked and a modest rise in productivity, a 0.4 percent rise is likely to be reported for October. Going forward, however, a desire to keep inventory from piling up is likely to result in more modest increases in production.

U.S. Economic Highlights

November 14, 2006

Is the economy strong or on the wrong track? The unemployment rate is low, but so was job growth in the last month (and changes in employment tend to lag changes in the economic environment). Inflation is still relatively low — low enough to allow the Federal Reserve to remain on pause for a second straight month. Car and housing sales were not rebounding in the early part of the autumn season. And the forward indicator of economic activity, the Leading Economic Index, remained soft through September. In short, the economic data were mixed through the latest week, but perhaps poised for a few more negative reports than positive ones, moving into the holiday season — only a week ahead now.