• US preliminary GDP Q/Q +3.3% 
  • Highest level since Q3 2014
  • USDJPY hits highest level in a week after the release; 112.10 possible resistance

The US economy continues to perform admirably with the latest economic growth figures showing the fastest pace of expansion since 2014. Preliminary GDP for the 3rd quarter came in at 3.3% in annualised terms, inline with expectations and marking a decent rise on the 3.0% seen previously. 

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 The growth in GDP in Q3 was the fastest seen in 3 years. Source: XTB Macrobond

One of the areas which contributed the most to the rise was business investment (blue bar above) which increased by 4.7% compared to 3.9% previously. You can also note that this was far smaller in Q1 and the consecutive gains seen here are a clear positive for the economy. 

 The US dollar has reacted positively to the beat with the move in USDJPY one of the clearest. The buck was up on the day ahead of the data with some hawkish comments from Yellen causing a surge of demand. In what may be her final testimony to Congress Yellen said that the “economic expansion is increasingly broad based” and that the job market will “strengthen somewhat further.”

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 USDJPY has added to earlier gains since the data but could be near a key resistance level at 112.10. Source: xStation

The USDJPY briefly traded above the 112 handle following the GDP release and although it has since dropped back below that level it is firmly higher on the day. Price has now moved in between the 8 and 21 EMAs on D1 and is not far from prior support at 112.10 which could now become resistance. Whilst the market remains below this level it remains under pressure and could see further declines but a break and daily close above 112.10 would be a bullish development and could signal an end to the downtrend seen for much of the month.