USD holds gains on GDP

Large revisions to the US GDP series saw some mixed interpretation and choppy price action in markets. After the dust settled though, the net interpretation was modestly more optimistic, and USD is generally outperforming as a result.

There were significant historical revisions to the GDP series, so while the headline print for Q2 was a slight miss at 2.3%q/q ann. (est. 2.5%), the upward revisions to recent quarters were taken as offsetting, even though nominal growth for the entire series was reduced slightly. Overall, the report was quite mixed, but not too far off of expectations. 

The positive slant on the report is that recent quarter growth was revised higher, with Q1 up to 0.6% (from -0.2%), and growth for 2014 as a whole lifted to 2.7% from 2.5%. There was an important revision to the composition of growth over the past four quarters-particularly for consumption. Spending is now shown as growing at 3.4% vs 3.1% on average. Inflation-wise, it's also notable that core PCE was stronger than expected.

"With US equities up 2.2% MTD, our model suggests selling USD against GBP, AUD, CAD, and NOK at the overnight NY close," notes RBC Capital Markets.