Typically, the euro would weaken in such an environment so we may finally be seeing the start of a recovery in the euro. Low inventory stock will support production gains in the months ahead. Jobless claims fel l 7,000 to 297,000 for the week ending May 6th. The four week moving average is now 285,000. The outlook for the May PPI is not very good given the recent reversal in oil prices.
Inflation is in the pipeline.
This will be a busy week with the FOMC meeting and the Congressional hearing on GSE on Tuesday, and a slew of economic indicators. Industrial production is expected to be strong and the market may start to pay more attention to the capacity utilization rate, especially if it surprises and crosses the 82.0 line. For quite some time now, inflation doves have pointed to the capacity utilization rate as an indicator of excess capacity in the economy. Lately, however, this indicator has been posting some strong increases. May. On Thursday, we get the March 21 FOMC meeting minutes and they could provide some insight to the Fed's decision on Tuesday.