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Strong US Data adds to USD Sentiment

Market Analysis

EURUSD, Daily              

US GDP was revised up to a 3.5% pace in Q3, better than expected, from the prior 3.2% pace, and the 2.9% pace in the Advance report. Growth increased 1.4% in Q2 and 0.8% for Q1. Consumption was nudged to 3.0% last quarter, from 2.8% previously, and 4.3% in Q2. Business investment was bumped up too, to a 0.1% pace from -0.9%, with nonresidential spending up 1.4% and residential spending down 4.1%. Government spending increased 0.8%, revised from 0.2%. Inventories were revised from a $17.1 bln contribution (0.49%) to $19.7 bln (still 0.49%). The net export injection was knocked down to $36.3 bln (0.85%) from $37.5 bln (0.87%). The chain price index and core price figure were unrevised at 1.4% and 1.7%, respectively. Also we had U.S. durable goods orders dropped 4.6% in November, not as weak as forecast, after rising 4.8% in October (revised from 4.6%). Transportation orders declined 13.2%, unwinding the 12.3% gain previously (revised from 12.0%). Excluding transportation, orders were up 0.5% versus the prior 0.9% (revised from 0.8%). Nondefense capital goods orders excluding aircraft climbed 0.9% from 0.2%, and have posted gains in five of the last seven months. Shipments inched up 0.1% from -0.1% previously. Nondefense capital goods shipments excluding aircraft rose 0.2% from -0.3% (revised from -0.1%). Inventories increased 0.1% from unchanged previously. The inventory-sales ratio was flat at 1.64.

Finally, U.S. initial jobless claims rose 21k to 275k in the December 17 week from an unrevised 254k in the week of December 10. That brought the 4-week moving average to 263.75k from an unrevised 257.75k. Continuing claims rose 15k to 2,036k in the December 10 week, from a revised 2,021k previously (was 2,018k). The BLS said there were no special factors in the data. Note the current claims data are important as the week coincides with the BLS employment survey.

The USD moved higher after the mix of data, where an improved Q3 GDP revision trumped expected durable orders weakness, and a higher jobless claims print. EURUSD fell to session lows of 1.0430 from near 1.0445, as USDJPY rallied to intra day highs of 117.87 from 117.70.

 

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Stuart Cowell

Market Analyst

HotForex

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