12 Dec 2014
More good news for US growth – BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, notes that yesterday’s retail sales report offered confirmation that the decline in gasoline prices will lift US growth over the coming quarters.
Key Quotes
“While the general election will prove important early next week for USD/JPY, the final important risk-event for the financial markets before Christmas will come on Wednesday with the FOMC statement and press conference by Chair Yellen. The retail sales report yesterday offered the
best confirmation yet that the decline in gasoline prices will lift growth over the coming quarters.”
“Based on the retail sales data yesterday for November, retail sales, excluding food, autos and building materials (Control Sales included in GDP) surged by 4.3% on an annualised basis in Q4 so far versus Q3. That is the clearest signal yet that Q4 real GDP is set to remain robust after the 3.9% gain in Q3. Another expansion north of 3.5% is now feasible which would mean five of the last six quarters have posted growth rates over the 3.5% level.”
“What more do the FOMC want? Clearly a communication change is coming next week although we should also assume that whatever replaces “considerable time” will be equally strong in signalling that the FOMC has time before having to act. That is likely to limit dollar buying.”
“Additional good news for the FOMC came in the form of the House passing a USD 1.1trn spending bill ensuring no budget funding gap that would have undermined confidence. The Senate is set to approve today, putting to bed the risk of fiscal uncertainty through to the remainder of the current fiscal year.”
Key Quotes
“While the general election will prove important early next week for USD/JPY, the final important risk-event for the financial markets before Christmas will come on Wednesday with the FOMC statement and press conference by Chair Yellen. The retail sales report yesterday offered the
best confirmation yet that the decline in gasoline prices will lift growth over the coming quarters.”
“Based on the retail sales data yesterday for November, retail sales, excluding food, autos and building materials (Control Sales included in GDP) surged by 4.3% on an annualised basis in Q4 so far versus Q3. That is the clearest signal yet that Q4 real GDP is set to remain robust after the 3.9% gain in Q3. Another expansion north of 3.5% is now feasible which would mean five of the last six quarters have posted growth rates over the 3.5% level.”
“What more do the FOMC want? Clearly a communication change is coming next week although we should also assume that whatever replaces “considerable time” will be equally strong in signalling that the FOMC has time before having to act. That is likely to limit dollar buying.”
“Additional good news for the FOMC came in the form of the House passing a USD 1.1trn spending bill ensuring no budget funding gap that would have undermined confidence. The Senate is set to approve today, putting to bed the risk of fiscal uncertainty through to the remainder of the current fiscal year.”