Alexander Kuptsikevich

New US data did not add positive to markets before FOMC

Published data on construction activity in the US in August slightly exceeded expectations. The number of building permits reached an annualized rate of 1.3M (an increase of 5.7% mom) above expected 1.22M. Housing starts fell by 0.8% during last month to 1.18M from 1.19M, slightly higher than the expected 1.175. Such statistics somewhat reduced fears of negative impact on the industry the beginning of the hurricane season, but did not deprive fears that the construction industry would pull down the US economy in the third quarter.

Besides these statistics there also were publications of current account and imports / exports price indexes. Current account again presented an unpleasant surprise as deficit widens to $123.1 billion in the second quarter from 113.5 billion in the first three months of this year. Expansion of the deficit was due to an increase in imports.

Import prices increased by 0.6% in August, and to the August of the previous year increase was 2.1%. Monthly growth was the highest since January, and the annual growth rate show the first acceleration after five months of recession.

The recovery of the US economy increases the demand for imports, and the weakening of the dollar makes it more expensive, which has a negative impact on the balance positions. At the moment, the news caused a slight impulse for the fall of the US currency in the range of 0.1-0.2%, but after initial move the markets returned to their former positions waiting for tomorrow’s Fed’s decision and monetary policy statement.