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US GDP suffers big downside revision but the USD shrugs

The third and “final” release of Gross Domestic Product in the US showed that the economy grew by only 1.8% (annualized) in Q1 2013. This is a sharp downside revision from 2.4% in the second release. The first release showed 2.5% and the original expectations were for growth above 3%.

This big disappointment hit the dollar, but the change isn’t that big: EUR/USD is 20 pips higher to 1.3040 at the time of writing and USD/JPY is at 97.40.

The final revision doesn’t usually differ that much from the second one nor from early expectations, especially as most of the data that comprises the GDP release are already out.

Why doesn’t the dollar react badly to such bad figures? The answer probably lies in the current focus of the Fed: jobs. Growth is still growth, whether strong or weak and as long as jobs continue rising, we are set to see tapering towards the end of the year.

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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.