US GDP growth beat expectations, surging to 3.3%, confirming the US economy is hot. The argument is that ‘this may be even hotter if the Fed were to cut interest rates’, but the Fed has resisted, due to inflationary fears. Later today, the US PCE inflation indicator will be released, and this is expected to show a jump in inflationary pressures. The PCE is the preferred measure of inflation by the Fed, so this number will be important, in terms of September rate cuts. The US Dollar eased, with the EUR pushing back towards 1.1700, while the GBP regained 1.3500.
The softer reserve allowed the AUD to consolidate above 0.6500, while the NZD pushes back towards 0.5900. NZ Business Confidence improved slightly, while attention will now turn to US inflation.
