USD/JPY Edges Lower After 2Q GDP Revision- All Eyes on Chair Yellen
- 2Q GDP revised lower to 1.1%q/q from 1.2%q/q in the first report- in line with expectations.
- USD/JPY extends morning losses after 2Q GDP is revised lower; Yellen still in focus
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The second reading of 2Q GDP was downgraded to 1.1% q/q, in line with market expectations, the Bureau of Econoimc Analysis reported today thereby raising economic recovery doubts.
Meanwhile the agency revised higher 2Q personal consumption to 4.4% from an a preliminary print of 4.2%. Analysts polled by Bloomberg expected 2Q personal consumption to remain unchanged at 4.2%.Although economic activity numbers disappointed, consumer spending remains healthy and will continue to be the main source of growth in upcoming quarters as investment and exports falter.
In a separate report July Advance Goods Trade Balance beat estimates at –USD59.3bn while the second reading for 2Q Core PCE, the Fed’s favorite inflation gauge, was revised upwards to 1.8% from 1.7%.
The 2Q GDP revision, however, is taking the back seat on Friday as the market remains more focused on a key speech by the Chair of the US Central Bank Janet Yellen in Jackson Hole, Wyoming later in the day. The Jackson Hole Symposium titled “Designing Resilient Monetary Policy Frameworks for the Future” will address how to tackle the next downturn within a context of weak economic growth, lack of inflation and historically low interest rates and it is expected to be medium to long term oriented. Nevertheless, if Yellen decides to focus on the short-term policy framework and echos the recent hawkish rhetoric espoused by other policy makers, the US Dollar could gain momentum and outperform other counterparts.
Here’s a summary of the U.S Data print:
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After the Q2 GDP second revision, UDS/JPY extended earlier losses and dropped to a daily low of 100.206. At the time this report was written, USD/JPY had settled around 100.234 as the market looks ahead to Yellen’s prepared remarks later in the day which could offer clues about the Fed’s normalization process.
--- Written by Diego Colman, DailyFX Research
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