The final GDP read for the third quarter was upgraded to 4.1% (annualized). This beat expectations and is far from the original read of 2.8%. The figure was expected to remain unchanged from the second release, and remain at an annual level of 3.6%. This strong growth rate is driven by a rise in inventories. This rise, together with the government shutdown, is expected to result in a weak read for the fourth quarter.
EUR/USD traded at 1.3645, off the lows seen earlier in the day. The pair is now trading lower, heading towards 1.3630.– updates coming —
USD/JPY was up to 104.53 and above 104.65 after the publication. GBP/USD at 1.6330, after receiving mixed data, including a confirmation of Q3 GDP at 0.8% (not annualized). It is now under 1.6320.
The move gives new fuel to the dollar after the big announcement of QE tapering. The dollar’s path up has not been even, but has been quite clear.
This upgrade in GDP is better than the previous one, as consumer spending was upgraded from 1.4% to 2%. While it still lags behind the general growth figure, stronger US consumption is key to US growth. Sales grew by 2.5%, better than 1.9% initially announced.
More: FX Outlook 2014 – Conditional Dollar Strength
