Market Wrap – US GDP data dump hits

The United States data dump came during the last but one trading session before Christmas. Markets saw a notable move higher in the US dollar after the US GDP number came in better than expected.

It was quite unusual for the market to rally on final Q3 US GDP data, however, it appears the positive reaction was due to the fact that traders believe the better number could cause the FED to continue to hike rates.

Breaking down the data, the US final Q3 GDP +3.2% vs +2.9% expected Consumer spending +2.3% vs +1.7%. The second reading GDP deflator 4.4% vs 4.3% second reading.

Core PCE prices 4.7% vs 4.6% second reading, Corporate profits +0.8% vs -0.2% second reading, Sales +4.5% vs 4.0% second reading, Inventories cut 1.19 percentage points from GDP, Exports +14.6% vs +15.3% second reading.

It should be noted that the major US indices fell on the strong number and the US dollar index moved higher. The EURUSD pair fell and the GBPUSD pair tagged the 1.2000 level.

More positive news was also seen as the number of Americans filing new claims for unemployment benefits rose by 2,000 to 216,000 in the week ending December 17^th.

This was below market expectations of 220,000 and extending signals of a stubbornly tight labour market, adding to hawkish projections for the Federal Reserve along with the upward revision to the US GDP.

The seasonally unadjusted gauge fell by 4,064 to 247,867, with notable decreases in Ohio (-1,983), California (-1,588), and Indiana (-1,565). The 4-week moving average which removes week-to-week volatility fell by 6,250 to 221,750.

Meanwhile, continuing claims inched lower by 6,000 to 1,672,000 thousand in the week ending December 3rd, the first weekly drop since October but remaining the second-highest results since February.

Elsewhere, crypto markets continued to slide lower while the move higher in precious metals, such as gold and silver, started to be revered as the US dollar started to gain strength.