USD PRICES EDGE HIGHER AFTER 3Q US GDP IS REVISED UP; STICKY CORE PCE; DURABLE GOODS SPIKE & INITIAL JOBLESS CLAIMS DROP – US DOLLAR EYES FOMC RATE CUT ODDS & PERSONAL SPENDING AHEAD
- USD price action spiked toward intraday highs following rosy data reports that underscored the robustness of the US economy
- The US Dollar could continue to climb after solid 3Q US GDP revisions and overall upbeat readings on the latest core PCE inflation, durable goods orders and initial jobless claims
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The US Dollar was on its front foot in early morning trade this Wednesday but was drifting lower headed into the New York opening bell as forex traders grew cautious as the second reading on 3Q US GDP was set to cross the wires.
This was in addition to several other high-impact economic indicators like durable goods orders and initial jobless claims.
The resilience of the US economy was underscored was more, however, as the reports came in better-than-expected on balance. USD price action spiked to intraday highs immediately following the economic data.
CHART OF 3Q-2019 US GDP DATA (SECOND READING)
Real 3Q US GDP was revised 0.2% higher from the original 1.9% estimate. Also noteworthy in the barrage of US economic data this morning is October durable goods orders which smashed the median consensus estimate of -0.9% with a reading of 0.6%.
Furthermore, the latest initial jobless claims and continuing claims data reiterates that the US labor market remains on solid footing. Initial jobless claims and continuing claims for the week ended November 23 and November 16 came in at 213K and 1,640K respectively.
US DOLLAR INDEX PRICE CHART: 5-MINUTE TIME FRAME (NOVEMBER 27, 2019 INTRADAY)
As previously mentioned, the US Dollar started to surge immediately following the overall upbeat US economic data, which underscores the firming Fed narrative and could serve as a positive tailwind for USD price action going forward. Looking later into Wednesday’s trading session, US Dollar currency traders will likely shift focus to personal income and personal spending data.
CHART OF FOMC INTEREST RATE CHANGE PROBABILITIES (MARCH 2020)
That all said, changes in FOMC interest rate change expectations stands to be a primary fundamental driver for the US Dollar. The probability that the Fed cuts rates by its March 2020 meeting continues to drop. In fact, the probability currently stands at 22.5% and is down from a 53.7% probability priced in by interest rate futures traders on November 01.
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