Big currencies tread water ahead of US data: FT

http://news.ft.com/cms/s/07926fbc-4cf9-11d9-b3be-00000e2511c8.html

Big currencies tread water ahead of US data
By Steve Johnson in London
Published: December 13 2004 11:27 | Last updated: December 13 2004 17:54

Major currencies trod water on Monday as the market awaited a flood of US data that begins flowing on Tuesday.

The dollar edged lower, in spite of supportive retail sales and business inventories numbers, as traders shied away from building positions ahead of more important data.

October portfolio inflow numbers, due on Wednesday, will shed light on whether the US is still able to fund its current account deficit at present exchange rates. If not further dollar weakness will be likely.

"There has been a steady decline in portfolio inflows over recent months. The point when the US will no longer be able to fund the monthly deficit with medium-term portfolio flows could be approaching fast," said Hans Redeker, global head of FX strategy at BNP Paribas.

Calyon estimates portfolio inflows fell to $56bn in October, "dangerously close to the $57bn that would have been needed to finance the expected monthly current account deficit in Q3", said Kristjan Kasikov, currency strategist.

Michael Woolfolk, senior currency strategist at Bank of New York, predicted a much larger inflow of $73.5bn, based on strong inward equity flows from BoNY's in-house data. However, he cautioned that these equity flows reversed in November. "The November figure could be particularly bad, it could come in below $50bn," he said.

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Merry Christmas? Probably Not

By David Koch

Sep 30, 2004 8:41 PM


The year 2004 may end with a whimper, not a bang, for retailers. Following a disappointing back-to-school season and tepid summer sales, most industry watchers expect holiday sales growth well below last year's 5.1 percent.

Projections vary widely -- 3 percent to 6.5 percent growth, with high gas prices cutting discretionary spending at the one end of projections but growing housing starts encouraging home furnishings sales at the other.


Retail consulting firm Davidowitz & Associates expects a 3 to 4 percent increase in holiday sales. At the other end of the spectrum, Columbus, Ohio-based Retail Forward, is optimistic, predicting this holiday season could be the best since 1999, with 6 percent to 6.5 percent sales growth.

"Lean inventories and firm prices should help," said Frank Badillo, senior economist for Retail Forward, which is also optimistic. "Retail sales should also continue to be boosted by a healthy housing market."

Washington D.C.-based trade association National Retail Federation predicts 4.5 percent growth. "Although consumer spending has been inconsistent in recent months, we expect the holiday season to bring more stability," said Rosalind Wells, NRF's chief economist. "Home-related merchandise and consumer electronics should do well this holiday season, and trendy fashions should help spark clothing sales."

NRF concedes, however, that rising interest rates and slow income growth could hurt sales.

High-end retailers such as Neiman-Marcus or Nordstrom, however, expect a lucrative holiday season, continuing a spurt in August sales. Neiman Marcus posted a 14.4 percent increase in comparable sales for the month, well above the industry average for same-store sales of 1.1 percent. Its wealthy customers easily absorbed expensive fuel costs and still had plenty to spend at retailers.

Nordstrom, reporting same-store sales growth of 7.2 percent in August, cited increasing demand for its accessories, women's shoes and women's designer apparel.

The International Council of Shopping Centers predicts such high-end retailers could also be in for a merry Christmas due to growth in personal income among upper-middle class households. Income for that group is expected to climb due to increased stock dividends, which rose 4.4 percent in July 2004, the highest since November 2000.

"This passive income pickup provides a reason for continued strength through the holiday season in luxury market demand, which is driven by the upper-middle to high-end household income consumer," said ICSC economist Michael Niemira.

While it remains to be seen whether holiday sales growth will be the highest since 1999, the ICSC reported an encouraging fact. The calendar has 29 shopping days between Thanksgiving and Christmas -- the most since 2001. More days could mean more money.

<link> http://retailtrafficmag.com/news/christmas-2004-retail-forecast/

Then I heard on today's radio news that sales are barely 1.0% over last year at this point. That is a very dreary outlook for retailers and jobs between now and when the season is offically over on New Years day.