US Dollar Spikes on Higher Q3 GDP Reading

The  US dollar enjoyed a  spike against several currency rivals at  the  end of  the  trading week, driven primarily by  a  higher final reading of  the  gross domestic product in  the  third quarter. The  buck was further lifted on  a  decline in  the  cost of  manufacturing goods consumed at  home and  exported to  foreign markets.

According to  the  Bureau of  Economic Analysis (BEA), the US economy expanded by an annualized 2.1% in the July-to-September period. The final reading is a 0.2% improvement from the initial Q3 GDP estimate of 1.9%. The upward revision was due to better consumer spending, which was then offset by weaker business investment. Higher exports, government spending, and residential investment also goosed the numbers.
The  GDP price index, which measures inflation in  the  production of  goods, came in  at  1.7%, down from 2.6% in  the  second quarter.
In  other data, the  personal consumption expenditure (PCE) prices clocked in  at  1.5%, down from 2.4% in  the  April-to-June period. Third-quarter corporate profits edged up just 0.6%, down from the  3.7% surge in  the  previous quarter.
Following the  release of  the  revised figures, the  US Dollar Index soared 0.2% to  97.57, from an  opening of  97.40. The  index, which measures the  greenback against a  basket of  currencies, is poised for  a  weekly gain of  0.5% and  a  1.5% advance for  2019.
Financial markets are expected to  enjoy some certainty in  2020 as  the  two major trade agreements will soon be approved. Treasury Secretary Steven Mnuchin confirmed that phase one of  the  US-China trade deal is currently going through a  technical review process and  the  full details will be released in  January. The  USMCA, despite some detractors in  the  House and  Senate, will be signed into law by  the  end of  January.
Chief White House economic adviser Larry Kudlow thinks the  trade pacts will add about 0.5% to  GDP next year. The  experts forecast GDP will slump to  1.5% in  2020, down from the  estimated 2.3% expansion in  2019.
The  USD/CAD currency pair surged 0.28% to  1.3165, from an  opening of  1.3127, at  12:50 GMT on  Friday. The  EUR/USD tumbled 0.27% to  1.1092, from an  opening of  1.1121.

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