The USD has continues to climb higher today, rising against everything from JPY to MXN. The Euro opened down nearly 50 points, despite better than expected car registrations, suggesting that auto-sales on the Continent may finally be picking up. USD/MXN also extended its recent rally, pushing as higher even as Mexico posted higher than expected growth for Q1 or 2013. Analysts had been expecting 0.3 percent YoY growth, in light of slowing manufacturing sector. While a slowdown did occur in the industrial sector, Mexico's service sector grew fairly robustly, or 1.9 percent on a YoY basis. The manufacturing sector shrunk however, by 1.5 percent YoY, consistent with March's dismal IP data. The primary sector grew at a 2.8 percent YoY pace, mainly due to increased crop yields. The manufacturing sector, the engine behind Mexico's booming exports, seems to have been hurt somewhat by US fiscal consolidation. Belt tightening occurred south of the boarder too. The Mexican government has been diligently working to eliminate its small budget deficit. Mexico's deficit in Q1 2013 was fifty percent smaller than its was this time one year ago. On the bright side, the Mexican consumer seems to have filled the spending gap somewhat, as evidenced by steady PCE data.
Data is great, but the broader theme here is a buoyant dollar that appears to be overwhelming internal fundamentals of both major and exotic currencies. Indeed, GBP, CHF, AUD, ZAR, INR, THB, TRY and a host of others are all way down for the week. Some of these country's central banks have taken action of late, and some haven't. The feeling in the air though, is the the Fed may be preparing to wind up its QE program while around the world other central banks are just getting starting.
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