Wednesday May 25, 2022

The growth of the US economy surprised, the dollar according to strengthens

The unexpected high growth of the US economy supported stock markets and the US dollar in the week, even though oil prices rose by about 2 USD / barrel due to the dangerous hurricane Gustav in Mexico.

Last week, he spoke better for the dollar than for the euro, despite problems in the financial sector, when the American Columbian Bank went bankrupt. The biggest problem is the American investment bank Lehman Brothers. The world’s stock indices are therefore arresting weekly down bank titles. On the contrary, the gradually rising price of oil supported the shares of energy companies.

Last week’s public data was higher than expected in the US, while in the eurozone and the United Kingdom it disappointed me even more. The public sale of its existing houses in the USA was a positive surprise, the consumer court in Germany disappointed and the mood among entrepreneurs dropped to a few years. In addition, the decline in the German economy by 0.5% in the second quarter was confirmed. In the euro area, according to a quick estimate of consumer prices for the month of August, inflation fell, which could open the ECB’s door to lower year rates. According to its representatives, in the course of the week, the reduction of rates in the euro area does not seem to be important for the time being.

US economy grew by 3.3% in Q2

The dollar strongly supported and the fourth revision of economic growth in the 2nd quarter, when due to foreign exports, the annual growth was revised to 3.3% from 1.9%. Analysts expected only 2.7%. In addition to the better results of foreign trade, the creation of resources and household expenditure also improved. But economists warn that government action will subside and the state of the worlds will deteriorate, which will have an impact on US exports and economic growth in the coming quarters.

The dollar ended the week sent by the euro by 0.4% to 1.4735, when it shrank during the week and to a 6msn maximum against the euro at 1.4570. Not only did the euro lose, it lost the dollar as well as the pound, which was again affected by the problems in the British economy, and it will probably not be any different in the nearest months. The pound reached the dollar and a minimum of 1.82 GBP / USD for more than two years, weakening by 1.1% last week. The pound also weakened against the euro, by 0.8% for a 12-year low of 0.8050 EUR / GBP.

Stock markets were supported worldwide by the good performance of the US economy in the second quarter. The American Dow Jones recorded 1.3% and the S&P 1.4%, with the exception of the technological Nasdaq, which lost 1.3%. The Japanese Nikkei scored 1.6%, the German DAX 1.5% and the British FTSE 3.5%, which was the highest number in the last few months.

Conflict with Russia and Hurricane Gustav
The conflict between Russia and the fallout over Georgia has escalated, as Russia has acknowledged the independence of Abkhazia and Jin Ossetia. Russian Prime Minister Vladimir Putin even accused the United States of having brought the conflict under Georgia under their baton. The European Union is considering sanctions against Russia. The conflict is gradually pushing the price of oil in, given that Russia is the second largest producer of oil in the world (according to data from 2006). In the Mean of Mexico, meanwhile, the most dangerous hurricane was created in this list, and therefore the companies were forced to evacuate the mining platforms. However, the International Energy Agency (IEA) reassured the markets by releasing reserves in the event of a severe shortfall in oil supplies to world markets. The price of Brent crude oil therefore rose by only USD 3 / barrel last week. In response to oil prices, the price of gold rose kind of week in a row by 1.5% to 835 USD / ounce.

For many years, rates in Central Europe have remained unchanged

All but three central banks sat in the region, leaving all rates unchanged, in line with the Slovak National Bank at 4.25%, the Polish National Bank at 6.0% and the Hungarian National Bank at 8.5%. The prospects for increasing rates in the region are deteriorating. Although the market will still have 2 x 25 points in Poland, in Hungary it will be appreciated that rates have reached a peak for this time and in the Czech Republic they will go down rather than up. Even in Poland, we could prove that the market is declining, despite the fact that the Polish economy is growing at a steady rate (in the second quarter, growth grew to 5.8%).

Moreover, the sending of the dollar is not favorable for Central European currencies, when the investor in the new market is moving again across the Atlantic. There is much speculation about the impact of the slowdown in the euro area on the economies of Poland, Hungary and the Czech Republic. But given that the Polish economy is far less open (according to exports to GDP) than the economy of both the Czech Republic and Hungary, it is expected that Poland will do its best from this unfavorable time. Currencies in Central Europe therefore tended to weaken against both the euro and the dollar. The Czech koruna lost 1.4% to the euro, the forint tact 1.4% and the zloty piblin 1.2%.

Graph: Development of the EUR / CZK exchange rate

The stock markets in Central Europe were affected by the sentiment on the world markets, which is why the PX and BUX indices added a percentage, respectively. 0.6% and 1.4%. The TIG was moving at open Monday values ​​during the afternoon.

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