We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
Oil - US Crude
Wall Street
More View more
Real Time News
  • (#ASEAN Fundy Weekly) The US #Dollar appears to be back on the offensive against ASEAN FX such as the Singapore Dollar and Malaysian #Ringgit. The Philippine Peso gained. What does #USD face from here? $USDSGD $USDPHP $USDMYR $USDIDR - https://www.dailyfx.com/forex/fundamental/article/special_report/2020/04/06/US-Dollar-Back-on-the-Offensive-USDSGD-USDPHP-USDMYR-USDIDR.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/8CKptvL6Uz
  • This thread 😂 https://t.co/9nek6fXA1t
  • This is the best one of the thread. https://t.co/dXGZZVzww7
  • Negative yielding government bonds – What are they telling us? Find out from @nickcawley1 here: https://t.co/F6JuhmrvPT https://t.co/ZzbHAVT6RE
  • LIVE IN 30 MIN: In this session, Currency Analyst @ZabelinDimitri will analyze the cross-asset impact of geopolitical risks affecting markets in the week ahead. https://www.dailyfx.com/webinars/146770987
  • Join @ZabelinDimitri 's #webinar at 11:30 PM ET/3:30 AM GMT to find out how geopolitical risk will affect the markets in the week ahead. Register here: https://t.co/hsULxMNOtM https://t.co/jdzRaFJnaa
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Silver: 0.20% Gold: 0.06% Oil - US Crude: -3.63% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/GqKRXlbHQc
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.42% 🇳🇿NZD: 0.30% 🇪🇺EUR: 0.07% 🇨🇭CHF: -0.04% 🇬🇧GBP: -0.24% 🇯🇵JPY: -0.38% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/6yhR5FFtZw
  • LIVE NOW: Join DailyFX Senior Strategist @IlyaSpivak LIVE as he discusses the outlook for the financial markets in the week ahead! https://www.dailyfx.com/webinars/889679267
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 95.10%, while traders in US 500 are at opposite extremes with 68.84%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/gvtwxfEvLB
US Dollar Whipsaws Around Weak GDP, Durable Goods Figures

US Dollar Whipsaws Around Weak GDP, Durable Goods Figures

2017-01-27 14:25:00
Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- Q4’16 US GDP comes in at +1.9%, the slowest pace since 2011.

- US GDP hasn’t topped +3% since 2005, and hasn’t topped +4% since 2000.

- US Dollar trades lower as US economic momentum appears to have cooled.

Webinar Schedule for Week of January 29 to February 3, 2017

Monday, 7:30 EST/12:30 GMT: FX Week Ahead: Strategy for Major Event Risk

Wednesday, 7:30 EST/12:30 GMT: Trading Q&A

Thursday, 7:30 EST/12:30 GMT: Central Bank Weekly

The US economy grew at a slower pace than anticipated last quarter, capping off the year with its worst growth reading since 2011. At +1.9%, the headline reading missed both consensus expectations (Bloomberg News’ aggregate forecast of economists called for +2.2%) as well as several tracking gauges put out by various Federal Reserve branches (Atlanta Fed was looking for +2.9%, NY Fed was looking for +2.1%).

Consumers remained the growth engine of the US economy, accounting for 69% of headline GDP in 2016. Yet aside from this one bright spot, there is a facet of the report that will likely come into focus: the trade balance. After President Trump lambasted Mexico over the US’ trade deficit with her third-largest trading partner, today’s data may fuel this sentiment: net-exports were -1.1% during Q4’16. In a rather simplified and elementary way of looking at it, if the US didn’t run a trade deficit last quarter (net-exp = 0%), then US growth would have topped +3%.

This will likely be the focus for markets over the session, as one of President Trump’s promises was to help the US economy achieve the elusive +4% growth rate again. Yet there is a more meaningful hurdle: the US economy hasn’t grown by +3% in any year since 2005; and +4% growth was last seen in 2000. Certainly, with the US economy underperforming both the market’s and the Fed’s own expectations, the prospect of an accelerated rate hike schedule seems dimmer this morning.

Here’s the data pushing the US Dollar lower this morning:

- USD Gross Domestic Product (4Q A): +1.9% versus +2.2% expected, from +3.5% (Annualized)

- USD Personal Consumption (4Q A): +2.5% as expected, from +3.0% (Annualized)

- USD Gross Domestic Product Price Index (4Q A): +2.1% as expected, from +1.4% (Annualized)

- USD Core Personal Consumption Expenditure (4Q A): +1.3% versus +1.4% expected, from +1.7% (q/q)

- USD Durable Goods Orders (DEC P): -0.4% versus +2.6% expected, from -4.8% (m/m)

- USD Durables Ex Transportation (DEC P): +0.5% as expected, from +1.0% (m/m)

Chart 1: DXY Index 1-minute Timeframe (January 27, 2017 Intraday)

US Dollar Whipsaws Around Weak GDP, Durable Goods Figures

Following the data, the US Dollar Index (DXY) fell from 100.63 to 100.38 at the time this report was written. The US Dollar has decoupled from its recent driver (the Trump reflation trade pushing US yields higher) and currently finds itself in a tenuous situation, potentially getting ready for a reversal back into the 2015-2016 consolidation – which would be rather foreboding for the US Dollar over a medium-term time horizon.

Read more: US Yields are Rising Again - So Why Isn’t the US Dollar?

--- Written by Christopher Vecchio, Senior Currency Strategist

Follow him on Twitter at @CVecchioFX

To be added to Christopher's e-mail distribution list, please fill out this form

View our long-term forecasts with the DailyFX Trading Guides.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.


News & Analysis at your fingertips.