|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||23.56 - 23.65|
|52 Week Range||23.09 - 26.16|
|PE Ratio (TTM)||N/A|
|Expense Ratio (net)||0.76%|
The US Bureau of Labor Statistics reported on Tuesday that consumer prices in the US grew by 0.2% in February after a stellar increase of 0.5% in January. The US dollar (UUP) declined after this report, as a lower rate of inflation could limit the pace of rate hikes from the US Fed. For developed economies, higher interest rates could lead to a higher valued currency. The US dollar (UDN) managed a minor recovery after the initial slump after the inflation (VTIP) report, but the recovery was short-lived as news about President Trump firing the US Secretary of State, Rex Tillerson, hit the wires.
The US Bureau of Labor Statistics reported that US consumer prices increased marginally in February. The year-over-year increase in core inflation (TIP) was reported at 1.8%, unchanged from the January reading. The inflation (VTIP) reading for February was largely in line with expectations, which is easing investor fears about interest rates rising too quickly and impacting the growth rate of equity investments and depressing the value of bonds (BND).
The Japanese yen (JYN) lost out to increased risk appetite thanks to softer-than-expected tariffs and the positive geopolitical development involving US President Donald Trump and North Korea’s Kim Jong Un. Also driving the yen higher were the comments from the Bank of Japan’s governor, Haruhiko Kuroda, who tried to take back his comments about the policy shift toward tightening. For the week ended March 9, the yen (FXY) closed at 106.80 compared to the US dollar (UUP), an appreciation of 0.99%.
The British pound (FXB) appreciated 0.32% against the US dollar (UUP) in the week ended March 9, 2018. The economic data released from the United Kingdom in the week indicated that the UK economy has been accelerating. Uncertainty surrounding Brexit negotiations has dampened the demand for the British pound, especially as we approach the next key Brexit date of March 22, 2018, when the spotlight will move to Brussels, where EU (European Union) leaders will meet to sign a transition Brexit deal.
The ADP February jobs report was published on March 7, 2018. It offered a deeper insight into the employment trends across different sectors in the US employment market. This report is prepared by ADP, a human resource management solutions provider, in collaboration with Moody’s Analytics.
The Japanese yen (JYN) regained its strength against the US dollar. The other factor that contributed to the yen’s appreciation was the comment from Bank of Japan Governor Haruhiko Kuroda. Kuroda used the word “exit” when referring to the central bank’s accommodative monetary policy program.
The euro-dollar (FXE) exchange rate closed the week ending March 2, 2018, at 1.23. The major factors that drove the euro in the previous week were the election and political uncertainty in Italy and Germany. Over the weekend, Italy had a hung parliament verdict.
The US Dollar Index closed the previous week with minor gains, but the index suffered after the announcement about tariffs last week. Historically, US tariffs on imports have been negative for the US dollar. If the current proposal becomes a law, the US dollar could have a similar fate.
Will Gold Lose Its Shine with the Spotlight on Bitcoin? Despite anecdotal comments from well-regarded financial commentators that gold prices and gold demand are suffering at the expense of cryptocurrencies, there isn’t any quantifiable evidence that gold holdings are directly suffering from competition from cryptocurrencies. The weakness in physical demand in 2017 – for example, the paltry sales of US Eagles – is largely explained by the steady march higher of the S&P 500.
The US Treasury manages the US government’s payments, and whenever there’s a shortfall in meeting expenses, the Treasury borrows and pays interest. When the tax revenue falls or the expenditure increases more than expected, the US Treasury could be forced to borrow more. Over the last 15 years, since the beginning of the “War or Terror” in 2002, government expenditure has increased because of military expenses.
A government budget deficit occurs when an economy’s annual revenue is less than its total expenditure. For fiscal 2019, the US Congressional Budget Office estimates the US budget deficit at $985 billion, where the expected revenue stands at $3.422 trillion while the budgeted expenditure was $4.407 trillion. The government spending is divided into mandatory and discretionary spending.
As we discussed in the previous part of this series, China (FXI), Japan (EWJ), Ireland, and the Cayman Islands hold the majority of the debt issued to the United States. The reason for these countries holding such high US debt is the trade surplus with the United States. The United States pays for this trade deficit in US dollars (UUP), and these countries use these surplus funds to buy dollar assets, mostly US government debt.