Service sector sentiment and currency issues
- We get little information on economics today other than service sector sentiment – prone to overreact to underlying economics, as most sentiment data is. There has been a bias for the US service sector to outperform the manufacturing sector of late.
- Relative service sector sentiment moves may owe something currency markets. Sentiment data is supposed measure real activity, but it tends to measure nominal activity. This makes manufacturing sentiment vulnerable to currency moves. Service sentiment will be less affected.
- US trade data is due for November (another nominal number, of course).
- Fed vice-Chair Fischer is scheduled to speak. Fischer has advocated the use of regulation as a policy tool, and suggested that the Fed should on occasion act to curb market moves. His comments could reflect the breadth of intellectual opinion on the FOMC.