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US Data - Flirting with Recovery?

Last updated 3/25/2009 10:52 AM ET (GMT -5) 0 Comments - Add your comment

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Kathy Lien

Director of Currency Research, GFT

Despite the doom and gloom outlook by some economists and the pessimistic feel on Main Street, recent economic data has shown signs of improvement.  Over the past week, everything from consumer prices, the current account balance, jobless claims, leading indicators, the Philly Fed index, and existing home sales have surprised to the upside. Although this is partially  due to the overly pessimistic forecasts, the data also suggests that the economy could be stabilizing.  

This morning's U.S. economic reports continue to flirt with recovery expectations.  For the first time since July, orders for big ticket items (durable goods) and new home sales have increased.  The upside surprise in durable goods was so significant that it completely overshadowed the downward revision to the previous data. Not only was the 3.4 percent rise was the strongest in more than a year but the 3.9 percent increase in orders excluding transportation was the strongest since August 2005.  This was largely due to higher spending on computers, machinery, capital goods and defense air crafts.

We may also be nearing a bottom in the housing market with mortgage applications and new home sales rising.  These improvements follow the rebound in existing home sales, housing starts and building permits. The 4.7 percent rise in sales of new home was the strongest since October 2007 and driven entirely by price cuts in the South and West.  In the Northeast and Midwest, sales actually decreased.  Across the nation, the median price of new home sales fell 18.1 percent.  The latest string of U.S. data does suggest that a recovery is possible but not without cause for concern.  

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About The Author

Kathy Lien began her FX trading career 10 years ago at J.P. Morgan Chase. After graduating New York University’s Leonard Stern School of Business at the age of 18, Kathy joined the bank's interbank FX trading desk and eventually moved to the cross markets proprietary trading desk. In the interbank market, her ability to create solid fundamental and technical analysis from the myriad of information on the market helped her trade forex spot and options. Her experience eventually led her to be chief strategist at Daily FX where she worked until she joined GFT in 2008.

With her knowledge of forex, as well as her experience trading other products, such as interest rate derivates, bonds, equities, and futures, Lien has built a reputation as an international currency analyst. She is frequently quoted on CNBC, Bloomberg, Fox Business and Reuters. Lien has also written for publications like Active Trader, Futures, and SFO magazine. She is the author of the newly updated Day Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves, and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Boris Schlossberg.

To buy Kathy’s newly updated Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves, click here.