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US GDP, inflation and sentiment data provides great entree to Yellen’s Jackson Hole speech

The tail end of last week was dominated by a selection of US economic including Preliminary GDP, Goods trade balance, Preliminary GDP price index, Revised University of Michigan consumer sentiment and revised University of Michigan Inflation expectations.

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The vast majority of data didn’t disappoint; Preliminary GDP met the predicted annualised level of 1.1% showing a slight ease from the last quarters level of 1.2% demonstrating that the goods and services market were well in line with expectations. Used car sales boosted the US economy’s house hold expenditure. Although it is worth mentioning that before tax corporate earnings fell from 4.9% in the first quarter to 3.4 %.

US GDP data was followed by the monthly Good trades balance showing that the trade balance has shrunk to $59.3 in July from Junes figure of $64.5 BN. The figure was attributed to by a rise in exports of $2.9 BN and a decline in imports of $2.4BN.

To conclude the US data releases markets saw the release of Michigan Universities revised consumer sentiment and Inflation expectations figures. Sentiment waned slightly from 90.4 in June to 89.9. This decline was attributed to a split in opinion as to which presidential candidate would improve the US economy’s output in view of Hillary Clintons increasing lead and more likely victory.

All of the data provided a timely warm up Yellens Jackson hole speech where she praised the labour market, the positive outlook for the US’s economic activity and inflation figures.  Indicating that recent data was giving more cause for a FED rate hike. Portraying that the US economy was nearing the goals set by the FED on employment and continuity on pricing.

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Although no specific rate hike timing was mention many now think September could be a possibility although more likely outcome would be after the US elections in November. Any rise however would be subject to relative GDP growth and a continual strengthening in the labour market.

Following the Data releases and Yellens Jackson Hole speech the USD rallied before turning to day ranges as statement was digested.


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