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Did the Fed hint about a strong GDP report?

Recent indicators about the US economy were not too good. Most recently, durable goods orders for December badly disappointed and included downwards revisions for November.  However, the FOMC statement did see a solid economy and even a strong jobs market. No word about falling wages – a figure  combining both the Fed’s mandates for jobs and inflation.

It is safe to assume that Yellen and her colleagues had the GDP report in front of their eyes.  Can we expect a strong GDP report? And  together with the headline GDP number, we also get the Employment Cost Index. So, will we see a boost to wages?

The Employment Cost Index already showed a pick up in wages in Q3 and contrasted the mediocre Average Hourly Earnings figure in the Non-Farm Payrolls reports.  Also other figures showed a more upbeat  picture. However, the most watched that is released on the first Friday of the month  was bad: a  fall of 0.4% in December m/m and a rise of only 1.7% y/y. Instead of an acceleration, we got a  deceleration.

Will the GDP report show a boost in the ECI that will later be followed by a jump in the Average Hourly Earnings?

In this corner of the web, we expect annual pay rises to boost wages, among other figures.

Markets expect an  annualized GDP rise of 3%, lower than the super strong 5% seen in Q3. The  Employment Cost Index carries expectations for a quarterly advance of 0.6%, quite a modest rise.

Here is how to trade the US GDP with EUR/USD

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.