EUR/USD dips remain shallow with bulls targeting stops above the 1.3060 level. That area is pivotal technically as it was the January 5 rebound high as well as the December 18 low after EUR/USD topped out at 1.3365. EUR/USD trades at 1.3030 amid 1.3020 bids on dips and solid offers ahead of 1.3050.
The European press is crowing this morning about a Conference Board report showing US productivity advancing only 1.6% in 2006, below levels in Europe and Japan. While that may be the case, the US has enjoyed unimagined productivity advances in the last decade with the 90s IT boom paying dividend for years.
One upshot of the report is that lower productivity growth lowers the "potential" growth rate of the US economy (the rate at which it can grow without producing inflation). This makes the Fed more likely to hike ahead than they would have been in the past. In a yield-starved world, this could support the USD in a macro sense.
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