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US Dollar rallied after the Q3 GDP upgrade

Market Analysis

AUDUSD and USDJPY, H1

The dollar rallied after the Q3 GDP upgrade, taking EURUSD and AUDUSD to one-week lows and USDJPY to six-session highs of 112.06 from 112.05. Meanwhile, Treasury yields moved higher, while equity futures indicate a modestly higher Wall Street open, on the expected upward revision in Q3 GDP and along with the wake of Yellen’s relatively optimistic prepared remarks and the firmer Wall Street banking on tax cuts.

U.S. Q3 GDP growth was revised up to a 3.3% pace, from the 3.0% from the Advance report, and it compares to the 3.1% rate from Q2. Consumption was bumped down to 2.3% from 2.4% previously. Business fixed investment was boosted up to a 2.4% rate versus 1.5%, with nonresidential spending up 4.7% compared to 3.9%, and residential at -5.1% from -6.0%. Government consumption was nudged up to a 0.4% clip versus -0.1% previously. Inventories added $33.5 bln (0.8%) versus $30.3 bln (0.73%) previously, and $4.3 bln (0.12%) in Q2. Net exports added $19.2 bln (0.43%) from the $18.1 bln (0.41%) in the Advance report. The chain price index slowed marginally to 2.1% from 2.2%, though the core edged up to 1.4% from 1.3%. The revision to growth was in line with the median, but a little less than we had forecast. It’s the first back-to-back quarters of better than 3% growth since Q2 and Q3 2014.

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Andria Pichidi

Market Analyst

HotForex

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