Summary:

• US GDP for Q4 misses forecast but sub-components more upbeat
• Durable hoods orders beat forecasts
• USD moves of its lows after a tough week

The US economy missed consensus growth forecasts for the final quarter of 2017 according to the first estimate, but a better than expected set of durable goods figures has alleviated the doom and gloom slightly heading into the US session. 

The Advanced (first of three) US GDP for Q4 came in at +2.6% against a consensus forecast of +3.0% and a prior reading of +3.2%. Whilst the growth itself is impressive compared to many other developed nations, the miss on expectations is a disappointment for the world’s largest economy. 

 

 The annualised GDP Q/Q reading from the US disappointed and came in below both the prior reading and the expected. Source: XTB Macrobond

Looking closer at the report there were some bright spots however, with a rise in personal consumption (show by the green bar above) one of the most pleasing factors. In terms of the US dollar the GDP price index also increased, moving up to 2.4% from 2.1% previously, against a forecast of 2.3%. 

At the same time as the GDP number there was also the latest durable goofs orders out with the more widely viewed core figure showing a larger than expected rise of 0.6% (0.5% exp and -0.1% prior). The headline reading was also a positive surprise with the M/M number coming in at +2.9% vs +0.9% exp and +1.3% prior. 

 Durable goods orders rose in the most recent release with both the headline and the core reading increasing more than expected. Source: XTB Macrobond

The USD has, on the whole, reacted positively to these releases having moved off its lowest levels of the day. The USDJPY is one of the best examples of this reaction with an initial drop on the GDP release swiftly reversing and the market then moving higher by around 50 pips.It has been a tough week for US dollar bulls with the Buck falling against the majority of its peers but they will be hoping some sort of recovery can occur before the markets close for the weekend. 

 The USDJPY has moved higher in the past 45 minutes despite the drop in US GDP. Source: xStation