European industrial output rose 1.7 percent in January, the most in two decades as the reviving global economy prompted companies to boost production ofgoods including steel and machinery parts. In the U.S., we saw the surprise increase of retail sales report for February despite the bad weather
We are seeing upside risk to Q1 growth, probably higherthan the widely expected 3 percent GDP growth in the first quarter for the U.S. Oil price should benefit from higher growth numbers, as energy usage go up globally.
The International Energy Agencyincreased its 2010 global oil demand forecast again last Friday, this time by 70,000 barrels per day, to 86.6 million barrels per day. This represents a 1.8 percent or 1.6 million bpd increase from thesame period a year ago.
Further, in its March report, the IEA forecasts that all of the demand increase will occur in emerging markets, or in what IEA calls non-Organization for EconomicCooperation and Developed (OECD) countries.
Just a week earlier, OPEC has raised its projections for oil demand growth this year by 100,000 barrels per day, to almost 900,000 barrels per day, or 100,000barrels a day more than its February projection.
The Obama administration plans to nominate the dovish Federal Reserve Bank of San Francisco President Janet Yellen for vice chairman of the FederalReserve Board, leading some to think that monetary policy may stay loose for a while.
With a US$12.5 trillion deficit and counting, we see the dollar as a structurally weak currency. As the fear of anydefault of the European sovereign debt subsides, euro may gain strength in the short term and commodity prices including oil and gold may go up as the dollar weakens.
With any hint of inflationflaring up, gold may be bought as a hedge and we see gold price going higher regardless of the strength of the dollar as global economy improves. The idea of gold becoming an unique currency may take hold...