Exchange rates and converters

In the rear view mirror, 4th quarter GDP was revised down slightly, mainly due to less inventory accumulation than initially reported. Monthly January reports included CPI, down big, two consumer confidence measures, one up and one down, but both down slightly from their highs last month (presumably due to increasing gas prices). Durable goods orders rose. New home sales were essentially unchanged from their post-recession high in December, while Case Shiller showed that house prices continued to rise.

     The easy money is gone from the market.  While 5-6 years ago (and even 2-3 year ago) you could find bargains (companies with strong earnings potential that were also cheap from a PE perspective), none really exist anymore.  In fact, the market is actually pretty expensive by standard valuation metrics.  Consider this table from the Wall Street Journal’s Market Data section:

The dollar was mostly firmer through the N.Y. session on Friday, as a lowered, but better than forecast Q4 GDP revision helped the greenback, while a soft Chicago PMI print was partially offset by better Michigan sentiment and pending home sales data. From a peak of 1.1245, EUR-USD slipped to new lows of 1.1176, as USD-JPY bounced over 119.75 from lows near 119.25. USD-CAD found support into 1.2450, before bouncing over 1.2525. Cable found buyers at 1.5400, and later rallied over 1.5460.

[EUR, USD]

     The news flow this week was remarkably light, with the US printing the bulk of the information.  Most of the news was related to the housing market, with the Case/Shiller new home price index coming in at 4.5% Y/Y rate, existing home sales dropping 4.5% and new home sales decreasing .2% M/M: