US GDP contracted by 3.8% in 4th Quarter. Dollar strong in Forex Trading. | CountingPips Forex Blog

January 30, 2009 - Forex Economic News

US GDP contracted by 3.8% in 4th Quarter. Dollar strong in Forex Trading.

The U.S. economy contracted in the 4th quarter of 2008 by the most since 1982 according to the latest release by the U.S. Commerce Department. The advance estimate report released today showed that the U.S. Gross Domestic Product contracted at an annual rate of 3.8 percent in the October to December 2008 quarter. The third quarter GDP fell by 0.5 percent Dollar strong in Forex Trading while the second quarter GDP grew by a 2.8 percent.

Today's GDP numbers were better than the 5.5 percent contraction that the economic forecasts were expecting for the fourth quarter but puts the U.S. economy in recession with a second straight decline in quarterly GDP. The generally accepted definition of a recession is two consecutive quarterly declines in GDP growth although the National Bureau of Economic Research did declare the U.S. economy as in recession in December.

Contributing largely to the decreased GDP for the 4th quarter was a second consecutive quarterly decline in consumer spending which makes up approximately two-thirds of U.S. economic activity. Consumer spending decreased by 3.5 percent in the 4th quarter after decreasing by 3.8 percent in the 3rd quarter which produced the lowest reading since 1980.

Exports declined sharply from the 3rd quarter as exports of goods and services decreased by 19.7 percent in the fourth quarter after increasing by 3.0 percent in the 3rd quarter. Imports declined in the 4th quarter by 15.7 percent following a decline of 3.5 percent in the 3rd quarter.

Today's GDP advance estimate is considered incomplete and subject to change with the preliminary estimate being scheduled for release on February 27th.

Forex Market - US Dollar strong in trading today.

The U.S. dollar has been mostly stronger today in forex trading against the major currencies as the dollar has shown gains against the euro, Canadian dollar, Australian dollar, Japanese yen, Swiss franc and New Zealand dollar while declining versus the British pound.

The euro is falling versus the dollar for the third straight day today as the EUR/USD has dropped from today's 1.2890 opening(00:00 GMT) to trading at approximately 1.2795 in the afternoon of the US trading session at 2:19pm EST.

The British pound has advanced today versus the American currency from the 1.4212 opening to trading at 1.4427 dollars per pound. The dollar has advanced against the Japanese yen today as the USD/JPY has gained from its 89.36 opening to trading at 89.94 yen per usd. The dollar has gained against the Canadian dollar after opening at 1.2282 earlier today to trading later at 1.2330.

The USD has also advanced against the Swiss franc from the 1.1546 opening to trading at the 1.1606 exchange rate. The Australian dollar has lost ground as the AUD/USD has declined from 0.6438 to 0.6361 while the New Zealand dollar has fallen from 0.5097 usd per nzd to trading at 0.5077 later today.

EUR/USD Chart - The Euro falling for the third straight day today against the US Dollar in Forex Trading and farther below the 21-day moving average(blue).

Today's Forex Chart

tags: us gdp, us economy, usd trading, forex

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