US GDP Jumps But The Dollar Slips, Why?

The US final GDP reading for Q4 came out better than expected at 2.1%, from 1.9% in the last reading. Yet, the Buck lost another half a yard against most major currencies. That took our GBP/USD signal down the sink with it, damn it.

The number for Q4 is pretty good, but the whole 2016 stands at 1.6%, which makes it the worst year since 2011. Analyzing the economic figures we have seen in recent months, we can say that there´s a slight pickup so far in 2017, but we can still dip to 2016 levels at any time.

We also have seen a number of FED members in the last couple of days talk about rate hikes, but if 2017 goes in a similar fashion as 2016 and economic growth remains below 2%, then I can´t see 2, 3 or even 4 rate hikes, as some of those guys are suggesting.

The FED wants to raise the interest rates, but that´s due to the fact that they want to give themselves some breathing room in case the US economy craps out and they have to slash the rates again.

I guess this is the reason the USD fell after the GDP report was released. The market is afraid that this year is going to be more or less the same as the last one and the FED will be forced to eat its hat, meaning they will stick to just one rate hike a year, or maybe two.

That´s why we have to closely watch and analyze the economic data, it´s one of the main factors that forms the market sentiment as days and weeks roll on.