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28 Sep 2015
US: Rate hike bets reincarnated by upward revision to GDP growth - MUFG
FXStreet (Delhi) – Lee Hardman, Currency Strategist at MUFG, notes that the recent upward revision to US GDP growth is further supporting the case for rate hike.
Key Quotes
“The US dollar has remained on a stronger footing in the Asian trading session after rebounding modestly last week supported by comments from Fed Chair Yellen that she still favours beginning to raise interest rates this year.”
“The release on Friday of the latest US GDP report for Q2 also provided more support in favour of beginning to reverse the current emergency policy settings. The report revealed that the US economy rebounded more robustly than initially estimated by an annualized rate of 3.9% in Q2 following the temporary slowdown in Q1. As a result the US economy continued to expand at an above trend annualized pace of 2.3% in the first half of the year prompting a further erosion of spare capacity.”
“It has been the strongest four consecutive quarters of personal consumption growth since the year up to the end of Q2 2006. The sharp decline in the price of crude oil is helping to support economic growth and providing an offset to external headwinds to growth from the stronger US dollar and weaker external demand as emerging economies continue to slowdown.”
“The strength of personal consumption growth will provide further reassurance to the Fed that the US economy is unlikely to be significantly negatively impacted by building downside external risks to growth. It supports the case for widening monetary divergence between the Fed and overseas central banks and resulting stronger US dollar.”
Key Quotes
“The US dollar has remained on a stronger footing in the Asian trading session after rebounding modestly last week supported by comments from Fed Chair Yellen that she still favours beginning to raise interest rates this year.”
“The release on Friday of the latest US GDP report for Q2 also provided more support in favour of beginning to reverse the current emergency policy settings. The report revealed that the US economy rebounded more robustly than initially estimated by an annualized rate of 3.9% in Q2 following the temporary slowdown in Q1. As a result the US economy continued to expand at an above trend annualized pace of 2.3% in the first half of the year prompting a further erosion of spare capacity.”
“It has been the strongest four consecutive quarters of personal consumption growth since the year up to the end of Q2 2006. The sharp decline in the price of crude oil is helping to support economic growth and providing an offset to external headwinds to growth from the stronger US dollar and weaker external demand as emerging economies continue to slowdown.”
“The strength of personal consumption growth will provide further reassurance to the Fed that the US economy is unlikely to be significantly negatively impacted by building downside external risks to growth. It supports the case for widening monetary divergence between the Fed and overseas central banks and resulting stronger US dollar.”