American GDP didn’t disappoint, and rose by 3.5%. The good news, coming after many disappointments, sent the dollar down against almost all the currencies…except the Yen. Is Obama’s stimulus plan succeeding?
Contrary to the big disappointment in Britain, that is still in recession in the third quarter, the United States is growing again. Advance GDP, the first release of Gross Domestic Product for the third quarter, rose by 3.5% in an annualized rate.
This exceeded expectations of a 3.2% rise, and fears that the US is still in big trouble. It also calmed down many economists that saw too many bad economic indicators this week. The CB Consumer Confidence that knocked down EUR/USD is a good example.
In a forex market dominated by risk – the reaction was dollar negative – the greenback fell against the Euro, Pound and the Swissy. The stronger moves are against the Australian and New Zealand dollars, that also suffered the most from this weak’s greenback recovery.
Another victim of this renewed optimism is the Japanese Yen. Dollar Yen correlation is strong when the risk factor is strong. USD/JPY rises. Yen crosses soar.
Is President Barrack Obama’s stimulus package working for the American economy? Billions of dollar clearly helped the economy. Is it sustainable? These questions might not be that important for forex traders…
For forex traders, the question is: how does it impact the dollar. I wrote more than once: Obama’s stimulus plan weakens the dollar.
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