US GDP Misses But Inflation And Wages Keep The USD Afloat

Skerdian Meta•Friday, April 28, 2017•1 min read

Another GDP report today and another miss. Actually, there were two GDP reports released at the same time; the US and Canadian GDP figures, both of which disappointed.

The Canadian economy was expected to grow by 0.1% in Q1 2017 but it remained flat, although we will have a thorough look at this when we analyze USD/CAD.

The US GDP miss was even bigger because the actual number was 0.7% while expectations varied from 1% to 1.3%, which is the lowest reading in the last 3 years.

A big miss but we remain within the range

It gets even worse when you see that consumer spending declined as well, from 0.8% in the previous reading to 0.3% in Q1.

But fortunately for us, since we have a long term sell forex signal in EUR/USD and a short term signal in AUD/USD, the USD is staying afloat. In fact, it is charging against most major currencies as I speak.

So, what's the reason for this? The reason is inflation and wages, both picked up and that´s what the forex market is most interested in right now.

GDP price index rose by 2 points from Q4 2016, while the employment cost index jumped to 0.8% from 0.5% previously. So, GDP doesn’t look good but the FED´s mandate is inflation and growth. Inflation is picking up as we said, while the jump in wages shows that the labor market is getting tighter.

As you can see, it´s this last two pieces of data which are driving the market at the moment and that´s going in favor on our forex signals, so looks like we will have another winning forex signal in AUD/USD.

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ABOUT THE AUTHOR See More

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.