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Lisa Parker

An editor at FOMOdrive

  • Jun 30, 2023
  • 2 min read

The growth of the US economy pleased the bulls on the dollar

100 dollar bills

After US GDP data came in stronger than expected, the dollar experienced a jump.

The dollar index rose to its highest level in two weeks, surpassing 103.40.

Initial jobless claims data was surprisingly better than anticipated.

The report on GDP revealed that inflation data was worse than anticipated.

Initial estimates of US GDP growth for the first quarter were surpassed as the final data revealed a more positive outcome.

On Thursday, the Bureau of Economic Analysis (BEA) - an agency of the US Department of Commerce that produces statistics on the US economy - reported that the US economy had grown by 2% in the first quarter of this year.

A month ago, an estimate of 1.3% GDP growth was made. This was due to a rise in consumer spending and net exports.

Consumer spending increased by 4.2%, the highest rate since the second quarter of 2021, almost two years ago. Exports rose by 7.8%, following a decrease of 3.7% in the fourth quarter of 2022.

The price index for personal consumption expenditures in the first quarter was revised to 4.1%, a decrease from the previously reported 4.2%.

The core price index for personal consumption expenditures, excluding food and energy prices, was revised downward to 4.9% from 5%.

For the week ending June 24th, the number of initial jobless claims decreased by 26,000 to 239,000, which was much lower than the expected 264,000.

Evidence of a strong recovery in the US economy was seen in the upward revision of the US GDP data for the first quarter and the decrease in the number of applications for unemployment benefits in the third week of June.

The probability of a 25 basis point rate hike at the next Federal Reserve meeting has risen to 86.8%, up from 81.8% the day before and 52.2% a month ago. This increase in likelihood is supported by recent economic data.

Next week, MUFG predicts that if the US releases stronger data, the dollar could become stronger.

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