Weekly Market Recap
Dollar decline and differentials
Week in review
- Unemployment rate increases to 7.5%
- Consumer confidence plunges to 75.9 from 87.9
- Business confidence declines to -14.0 from 0.0
- Australia preliminary retail sales
- U.S. and Eurozone PMIs for August
- Japan real GDP 2Q
Thought of the week
The 7% decline in the U.S. dollar since mid-May has helped the prospects in emerging market equities and dollar price commodities such as gold. Several factors have been behind the dollar’s fall; reversal of safe haven buying, growth differentials between the U.S. and the rest of the world as well as interest rate differentials. The chart shows the precipitous drop in the two year real yield and its impact on the direction of the greenback, but the relationship is not steady over time. Given that nearly all developed market central banks have signalled that interest rates are to stay at record lows for sometime, the influence of rate differentials with weaken. The growth outlook will become the dominant factor, but more importantly confidence in growth will hinge on ongoing fiscal policy support and signs of improving health of the labour market in most economies.
Real rates bring dollar down
U.S. dollar index and U.S. 2 year real yield
JPMorgan Global Research Enhanced Index Equity Fund
To achieve a long-term return in excess of the benchmark by investing primarily in a portfolio of companies, globally; the risk characteristics of the portfolio of securities held by the Sub-Fund will resemble the risk characteristics of the portfolio of securities held in the benchmark.