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U.S. Economy Expanded Far Less Than Forecasted in Q2

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The U.S. economy expanded less than forecasted in the second quarter as inventories declined for the first time since 2011, but a surge in consumer spending pointed to underlying strength.

The Commerce Department said that the GDP grew at an annual rate of 1.2% after rising by a downwardly revised 0.8% pace in the Q1. US economic growth for Q1 was revised down from 1.1% to 0.8%.

Gold prices settled at $1,350, its highest level in three weeks, thanks to weak US data. From a technical point of view, the yellow metal could settle during today’s trading session with the opportunity to re-test $1,330 and $1,340 during the course of the week.

On Friday, the Bank of Japan threw market hopes that it might increase buying of its ETF purchases  or lower already negative interest rates, boosting the view that it’s running out of options within its existing policy framework to hike prices and end 20-year’s of deflationary pressure.

JPY surged to ¥102 vs. USD positively affected by the BOJ’s recent decisions. From a technical point of view, JPY could re-test 100 soon.

Euro traded at $1.12 vs. USD thanks to weak US data to end the week 1% higher. On the other hand, GBP traded above $1.33.  

Oil prices recovered on Friday, and crude finished the month nearly 15% lower, with U.S. crude declining the most in a year because of an oversupply. WTI and Brent fell by 20%, below their 2016 highs, negatively affected by slower economic growth and oversupply of crude. WTI traded at $40, thanks to weak USD.

The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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