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Still In A Bear Cycle


Summary: USDBRL Extends Losses To Near 2%


Needle Still Points North


Focus on Midweek BoC, ECB Policy Announcements


EUR Crosses Come Under Pressure As ECB Beckons

MNI (London)
By Alexandra Kelley
     WASHINGTON (MNI) - U.S. retail sales are expected to bounce in October,
with analysts looking for a gain of 0.4% m/m, recovering from September's
unusually low -0.3%. 
     The core measure of retail sales excluding motor vehicles mirrors the
outlook, forecasting a 0.2% acceleration from a much slower -0.1% rate in
     The weak data last month suggested a softness in consumer confidence, but
October's forecasted reading should assuage worries of a crack in consumer
spending base.
     Retail sales are closely linked with the price of gasoline, which posted
major gains in the October CPI report, jumping to 2.7% after steady recent
declines. September saw a 0.7% dip in gasoline sales driven by low prices, which
looks to be rebounding this October. Auto sales saw dips as well, which isn't
likely to improve on Friday.
     The same report showed that apparel prices dropped to -1.8% from -0.4%,
implying lower nominal retail sales for clothing. Dismal vehicle sales are also
expected to dampen the headline number. 
     As motor vehicles and gas are volatile sectors, analysts will look to core
readings as a more robust marker. Andrew Grantham, chief economist at CIBC
Economics, eyes the retail sales 'control group' figure that excludes gas, auto,
food services and building materials, which he says, have had a "good run for a
few months" and are expected to maintain steady readings in the future. 
     The control group feeds into GDP calculations. With the third quarter GDP
readings coming in at a comparatively strong 1.9%, robust retail sales control
group readings are especially likely. 
     Grantham also believes a healthy savings rate among consumers and a steady
employment rate will contribute to the retail sales number. These factors,
coupled with consistently positive consumer sentiment and confidence indexes,
make Grantham confident that the consumer will still be "one of the main drivers
of growth in the future quarters." 
--MNI Washington Bureau; +1 202 371 2121; email:
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MNI London Bureau | +44 203-865-3812 |