According to Richard Franulovich, head of FX strategy at Westpac, the US’ growth leadership credentials are coming under pressure as the differential between the US and Eurozone PMIs, the rate of change of yield spreads and US GDP growth vs the major trading partners has come to a grinding halt in the last couple months, calling into question one of the key underpinnings for the USD.
Key Quotes
“US consumer sentiment had been more tracking a more resilient path than business sentiment lately but that suddenly came to an end with the January release of the Michigan sentiment survey; respondents citing the citing the ongoing government shutdown and market volatility as key considerations.”
“The expectation has been that a tight labour market and firming wages would support consumer spending. However, details in the Michigan sentiment survey raise some question marks.”
“Buying conditions for houses are considered to be at their weakest since the 2008 financial crisis while buying conditions for autos are their weakest since 2010.”
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