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US Breaking News: Q4 GDP Surges to 2.9% on the Quarter, USD Dips

US Breaking News: Q4 GDP Surges to 2.9% on the Quarter, USD Dips

Richard Snow, Analyst
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US Q4 GDP Beats Estimate and Immediate Market Response

  • US Q4 GDP reveals a strong and resilient economy, growing 2.9% QoQ vs 2.6% expected.
  • Markets appear to grapple with what this means for the path of future rate hikes and when exactly existing rate hikes are likely to show broader signs of stress
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US GDP Data Beats Estimate


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The first look (advance) estimate of US GDP continues the growth trend after Q3’s amazing rebound. The report points to increases in private inventory investment, consumer and government spending while a drop in imports suggest signs of constrained demand.


Source: US Bureau of Economic Analysis, prepared by Richard Snow

Further boosting hopes of a ‘soft landing’ is the encouraging jobs data as initial jobless claims drop below 190k for the first time since April 2022.


Source: Refinitiv, prepared by Richard Snow

Are Conditions Improving for a Soft Landing?

Earnings season thus far has been a mixed bag with most of the mega-cap tech companies due to release their respective trading updates next week. On a positive note, two thirds of companies that have reported updates have beaten EPS estimates while many company heads have expressed concern over a low to no growth environment up ahead. Further warning signs appeared as the major US banks, on the whole, increased their credit loss provisions in anticipation of non-performing loans and the tech sector announces more job cuts in a bid to retain their margins. So far, the more concrete data suggests that a soft landing has gained in probability although the FOMC meeting later will be extremely important should we hear any forward guidance relating to a faster end to the rate hiking cycle based on lower inflation and an improved economic outlook.

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Market Response after the GDP Print

Price action in the moments after the report, revealed an initial impulse with an immediate retracement. Looking at the US dollar basket for example, there was an initial move higher, followed by a stronger move lower but ultimately, the market reaction was rather muted as a whole as. Markets now focus their attention to the PCE data tomorrow but more importantly to the FOMC decision next week where the current consensus is for a 25 bps hike. Better than expected economic data allows the Fed license to keep interest rates higher for longer as the trade-off (an economic slowdown) appears to be delayed.

US Dollar Basket 5-min chart

Source: TradingView, prepared by Richard Snow

US 2-Year Yield

The 2-year yield unsurprisingly, witnessed the same response as the dollar with an initial move higher which was immediately pulled back and trades at the same level seen before the release.

Source: TradingView, prepared by Richard Snow

S&P 500 E-Mini Futures

S&P 500 equity futures show a drop to the downside which was more than recovered in the moments that followed.

Source: TradingView, prepared by Richard Snow

Today's price action ahead of the US open carries a fairly large degree of importance when you consider the upside breakout that has appeared on the daily chart. Yesterday, price action showed the first real defence of a trendline break that we have seen since the start of the longer-term downtrend. A close on the daily chart above the trendline will be key for a potential bullish breakout but it must be said that price action will follow on from prominent earnings reports due next week and of course, the FOMC and NFP data. All of which has the potential to send equities lower and invalidate signs of a bullish move so the threat of false breakout remains high.

S&P 500 Futures Daily Chart

Source: TradingView, prepared by Richard Snow

--- Written by Richard Snow for

Contact and follow Richard on Twitter: @RichardSnowFX

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