US Q2 GDP Stronger Than Expected, US Dollar Continues to Rally
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US Q2 GDP and Dollar Price, Chart and Analysis:
- US Q2 GDP beats to the upside.
- Attention now turns to next week’s docket including the FOMC monetary policy meeting.
The advanced US Q2 GDP (annualized) fell to 2.1% from 3.1% in Q1 2019 but beat market expectations of 1.8%. According to the Bureau of Economic Analysis (BEA),
“The increase in real GDP in the second quarter reflected positive contributions from personal consumption expenditures (PCE), federal government spending, and state and local government spending that were partly offset by negative contributions from private inventory investment, exports, nonresidential fixed investment and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased. The deceleration in real GDP in the second quarter reflected downturns in inventory investment, exports, and nonresidential fixed investment. These downturns were partly offset by accelerations in PCE and federal government spending.”
The US dollar basket (DXY) pushed marginally higher post-release, continuing its recent rally and taking it back towards its 27-month high of 97.86 made on May 23 this year.
US Dollar Daily Chart (December 2018 – July 26, 2019)
Busy Week of Heavyweight US Data and Events Ahead
A quick look at the economic calendar shows a raft of market-moving events and data releases next week which should keep US dollar traders busy. While Wednesday’s FOMC meeting is the main course – with a 0.25% interest rate cut now fully priced-in - inflation data on Tuesday and the latest Labor market report (NFP) on Friday will also give traders a much better picture of the underlying health of the US economy.
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