25 Nov 2015
US: Disappointing data leading to weakness in USD - MUFG
FXStreet (Delhi) – Derek Halpenny, European Head of GMR at MUFG, notes that while the real GDP data from the US was broadly in line with expectations (revised from 1.5% to 2.1%), the consumer confidence report was far weaker with confidence dropping from 99.1 to 90.4 in November.
Key Quotes
“This is a hard one to explain to be honest. The report was released a little earlier than usual due to the Thanksgiving holiday and perhaps that has resulted in a skew in the data, we don’t know. We have checked the Conference Board website and the survey cut-off date was 12th November. The terrorist attacks in France can therefore not be cited as a factor.”
“The equity market drop might have impacted – the S&P 500 fell over 4% from the high on 3rd November to a low on 13th November. But a near 10pt plunge in confidence is hard to explain by just that alone. Fears over the Fed raising rates after the strong jobs report may also have played a role – but again it is hard to understand such a plunge in confidence.”
“However, perhaps we shouldn’t be too concerned. The real GDP data yesterday confirmed real consumer spending of 3.0% Q/Q annualised in Q3 which means the average growth rate in the last year has been an impressive 3.2%, the strongest since 2005.”
“Consumer confidence remains in the range of the last year and a half and hence the overall level of confidence is not yet alarming. Given the difficulty in explaining this drop, a rebound seems most likely next month.”
Key Quotes
“This is a hard one to explain to be honest. The report was released a little earlier than usual due to the Thanksgiving holiday and perhaps that has resulted in a skew in the data, we don’t know. We have checked the Conference Board website and the survey cut-off date was 12th November. The terrorist attacks in France can therefore not be cited as a factor.”
“The equity market drop might have impacted – the S&P 500 fell over 4% from the high on 3rd November to a low on 13th November. But a near 10pt plunge in confidence is hard to explain by just that alone. Fears over the Fed raising rates after the strong jobs report may also have played a role – but again it is hard to understand such a plunge in confidence.”
“However, perhaps we shouldn’t be too concerned. The real GDP data yesterday confirmed real consumer spending of 3.0% Q/Q annualised in Q3 which means the average growth rate in the last year has been an impressive 3.2%, the strongest since 2005.”
“Consumer confidence remains in the range of the last year and a half and hence the overall level of confidence is not yet alarming. Given the difficulty in explaining this drop, a rebound seems most likely next month.”