US GDP surprises to the upside

USDIndex, H1

US Q3 GDP was revised up to a 2.3% seasonally adjusted annualized growth rate, a little better than expected, after inching up to 2.1% in the second print, and versus 2.0% in the Advance (first) report. Growth has decelerated from the 6.7% clip from Q2 and 6.3% in Q1. Q3 consumption was bumped up to a 2.0% rate from 1.7% previously, but has slowed measurably from rates of 12.0% in Q2 and 11.4% in Q1. Investment was revised higher too with business fixed investment growth at a 1.7% rate versus 1.5%, while the contraction in residential investment was at -7.7%% from -8.3%. The weakness in Q3 exports deepened to -5.3% from -3.0% previously, while imports growth slowed to a 4.7% rate from the prior 5.8%. Government spending was unchanged at 0.9% for Q3. Meanwhile, inflation continued to rise with y/y rates just shy of the highest since the early 1980s. The chain price index accelerated slightly to 6.0% from 5.9%, though is just off the 6.1% from Q2 that has not been seen since 1982. The core rate up at 4.6% from 4.5% previously and versus the 6.1% Q2 rate that was the peak since 1983.

The Dollar shrugged off the GDP revision, EURUSD sits at session highs at 1.1315, while USDJPY is steady near 114.20, with the USDIndex testing lows of the week below the short-term support at 96.30. 96.00 remains the main line in the sand this week. Later in the US session (15:00 GMT) there is the main, potentially market moving data of the day, with US conference board consumer confidence (expected to tick up to 111.00 from 109.5) and existing home sales (also expected to rise to 6.55 million from 6.43 million).


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Stuart Cowell

Head Market Analyst

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