US Q4 GDP Higher and beat for Consumption

EURUSD, 1H                

U.S. Q4 GDP was revised higher to a 2.1% growth rate versus 1.9% in the Advance report, a little shy of expectations. It compares to the 3.5% pace in Q3, 1.4% in Q2, and 0.8% in Q1. Personal consumption was bumped up to 3.0% from 2.5% in Q4 and 3.0% in Q3. But, that upward revision was offset by a downward revision in fixed investment to 3.2% versus 4.2% previously and versus 0.1% in Q3, with residential structure spending at 9.6% versus 10.2% for the prior Q4 pace, with nonresidential spending at 1.3% versus 2.4%. Government spending was knocked down to 0.4% compared to the prior 1.2% Q4 read. The inventory contribution was nudged down to $39.1 bln (0.94%) compared to $41.6 bln previously (1.0%). The hefty $77.4 net export subtraction (-1.70%) was not revised. Growth in the GDP price deflators slowed, with the headline revised to 2.0% from 2.1% previously, with the core rate at 1.2% versus 1.3%.

The dollar fell following the data, EURUSD rallies 10 points or so to session on highs of 1.0605, as USDJPY slipped under 112.05 from 112.25 and cable broke to 1.2436 before retreating to 1.2420.  EURUSD has intraday support at 1.0580 and resistance at 1.0605.  The majors are likely to remain range bound until the President addresses congress at 02:00 GMT tomorrow.

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Stuart Cowell

Senior Market Analyst


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