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1 Jul 2014
US GDP expected to rebound sharply in Q2 - ING
FXStreet (Łódź) - James Knightley from ING points out that recent US data has been rather positive and that today's ISM numbers, expected to come in above 55, could reinforce the view that the US Q2 GDP reading will be a strong one.
Key quotes
"The regional manufacturing purchasing managers’ indices released over the last week or
so, have in general, been very encouraging. New orders are at good levels, employment
is rising and business optimism is improving."
"Admittedly, part of this is a rebound after the weather-related weakness of 1Q14, as highlighted by the 1Q GDP revisions last week. Nonetheless, they are still pointing to an ISM reading in excess of 55 today, which has historically been consistent with GDP growth of 3.5% YoY."
"With other high frequency data also suggesting ongoing strength in demand and improving confidence, we continue to look for a sharp rebound in 2Q GDP growth."
"With inflation picking up too it will keep the Federal Reserve asset tapering program in
place – we still expect it to come to an end in October with a first rate hike following up in
April next year."
"Given the ECB is still in easing mode and with little prospect of an meaningful growth rebound or a sharp pick-up in inflation in the next twelve months given still weak credit and lagged effects of euro strength, interest rate differentials will increasingly favor the USD in the months ahead. As such, we still target EUR/USD at 1.28 for year end."
Key quotes
"The regional manufacturing purchasing managers’ indices released over the last week or
so, have in general, been very encouraging. New orders are at good levels, employment
is rising and business optimism is improving."
"Admittedly, part of this is a rebound after the weather-related weakness of 1Q14, as highlighted by the 1Q GDP revisions last week. Nonetheless, they are still pointing to an ISM reading in excess of 55 today, which has historically been consistent with GDP growth of 3.5% YoY."
"With other high frequency data also suggesting ongoing strength in demand and improving confidence, we continue to look for a sharp rebound in 2Q GDP growth."
"With inflation picking up too it will keep the Federal Reserve asset tapering program in
place – we still expect it to come to an end in October with a first rate hike following up in
April next year."
"Given the ECB is still in easing mode and with little prospect of an meaningful growth rebound or a sharp pick-up in inflation in the next twelve months given still weak credit and lagged effects of euro strength, interest rate differentials will increasingly favor the USD in the months ahead. As such, we still target EUR/USD at 1.28 for year end."