Pull-back to lows after economic data?

The Dollar was little changed following the mix of data, where the revised Q2 GDP was in-line with consensus, jobless claims as expected, and the advance trade deficit slightly narrower than forecast. EURUSD sits at 1.0945, above earlier 29-month lows of 1.0922, while USDJPY is steady near 107.57. Equity futures continue to indicate a modestly higher Wall Street open, while yields are little changed.

US initial jobless claims rose 3k to 213k in the week ended September 21 after the prior week’s 4k increase to 210k (revised from 208k). We had expected a larger increase on the week due to the spillover effects from the GM strike, though that may show up in coming weeks. The 4-week moving average dipped to 212k versus 212.75k (revised from 212.25k). Continuing claims declined 15k to 1,650k in the September 14 week following the prior 9k drop to 1,665k (revised from 1,661k). The data still reflect a solid labor market.

US Q2 GDP growth was steady at the prior 2.0% pace, and compares to the 2.1% clip in the Advance report. The Q1 pace was 3.1%, with Q4 at 1.1%. Back to Q2, consumption was nudged down to 4.5% versus 4.7% previously. Business investment worsened further to -6.3% versus -6.1%, slowing sharply from 6.2% in Q1 as trade uncertainties and Boeing weighed heavily. Government spending was revised up to 4.8% versus 4.5%. Inventories subtracted -$46.6 bln versus -$47 bln previously after adding $23 bln in Q1. Net exports subtracted -$36.7 bln versus -$38.5 bln, after adding $39 bln in Q1. The chain price index was unchanged at 2.4%, and was 1.1% in Q1. The core rate rose to 1.9% from 1.7% previously and 1.1% in Q1.

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Andria Pichidi

Market Analyst

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