Dollar gained after US GDP report

The preliminary estimate indicated an annualised growth rate of 6.4% for the US economy in the previous quarter. These figures marked an acceleration from the last quarter (4.3%) but a bit worse than the average expectation of 6.8%.

With the latest increase, GDP was 0.4% higher than a year earlier, which means that economy has overcome the pandemic downturn. At the same time, neither the Fed nor the presidential administration is in a hurry to move away from its extremely stimulating policy. The economy needs to catch up with previous levels and compensate for the accumulated slump, so that job losses do not turn out to be chronic and the rapid recovery is not lost.

It wouldn’t be correct to assume that a strong GDP report is behind the subsequent strengthening of the dollar after the release. It is more likely that this is just a manifestation of the monthly flows to the dollar. These movements are local. If we are right, they could lose strength as early as next week.

The FxPro Analyst Team