Light Bids in the USD After Higher US Q2 GDP Revisions

The US dollar has reversed and has been declining in the last several weeks, following several months of a bullish trend. The FED is now mentioning rate cuts for next year, so nothing is helping the USD, even impressive economic data, such as the GDP report which was released earlier today, showing a 5.2% expansion of the economy in Q3.

The GDP numbers moved up in the second reading on higher inventories and g

overnment spending which accounted for the higher revisions. In case government expenditure declines, such gains will probably be reversed though, but inventories are more volatile. “The update primarily reflected upward revisions to nonresidential fixed investment and state and local government spending that were partly offset by a downward revision to consumer spending,” according to the news release from the source.

In terms of the market, this report may highlight weaker consumer spending. Dollar Tree decreased their guidance today as well, emphasizing the difficulty of the low-income consumer, as Feds Barkin: I’m hearing consumers slowing but not falling off the table, while revised consumer spending data is more in line with what I’m hearing on the ground. Consumers are slowing down but not abandoning the market. Both hint at a consumer downturn ahead, which will put a stop to the inflation menace.

US Q3 Prelim GDP Reading for 2023

• US Q3 GDP (second estimate) 5.2% vs 5.0% expected
• Advanced reading was +4.9%
• Q2 final reading was +2.1%
• Personal consumption +3.6 vs +4.0% advance reading
• Core PCE prices +2.3 vs +2.4% expected
• PCE prices +2.8% vs +2.9% advance
• GDP deflator +3.5% vs +3.5% expected
• GDP final sales +3.7% vs +3.5% advanced
• Corporate profits after tax +4.1% vs +0.5% in Q2
• Full report

Percentage point changes:

Net trade -0.04 pp vs -0.08 pp advance
Inventories +1.40 pp vs +1.32 pp advance
Govt +0.94 pp vs +0.79 pp advance

GBP/USD Live Chart