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08/03/2008 - It’s official: The US economy is ‘less crappy’ than the rest of the G7

Posted by FOREX.com's Weekly Strategy in August 1st 2008  
* It's official: The US economy is 'less crappy' than the rest of the G7
* A breakthrough for solar/fuel cell technology
* Central bank decisions next week: Fed, RBA, ECB & BOE
* Key data and events to watch next week

To use a technical economic term, the US economic outlook is decidedly 'less crappy' than the rest of the other G7 economies. In last week's report, Jake Oubina provided readers with a concise recap of recent data that pointed to stabilization in the US contrasted with a rapid deterioration in economic data elsewhere, but especially in the UK and Western Europe. This past week saw that pattern continue for the US and the data from across the Atlantic actually deteriorated even more substantially. I won't go into all the data points here, but I will note US 2Q GDP came in just shy of 2% annualized (and is likely to be revised slightly higher based on positive revisions to other 2Q data) and that the July NFP job loss was less than expected. I'm not suggesting the US has turned the corner toward strength, but it's clearly stabilizing and fears of recession are, or should be, continuing to fade. Compare that to the dismal data stream coming out of Europe and the UK, which led the largest US investment house to change its UK forecast today to a recession in 2H 2008, and I continue to look for the USD to perform better against the other major currencies. Perhaps the easiest way to think about it is not as a 'buy the USD story', but as a 'sell EUR, GBP, CHF, AUD and NZD' story.  Full text »

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Filed under: Weekly Strategy