US GDP rebound fails to ignite dollar spark

US GDP rebound fails to ignite dollar spark

The dollar lost 0.5% against the euro to $1.1729 and was 0.2% weaker versus the pound at $1.3086.

Friday's GDP data is the first of three measurements the Commerce Department will take of the economy in the second quarter. In addition, it revised first quarter growth down from 1.4 percent to 1.2 percent.

But with wage growth remaining sluggish despite the labor market being near full employment, there are concerns that consumer spending could slow in the third quarter.

The economy grew 1.9 per cent in the first half of 2017, near the expansion's 2.2 per cent average pace through the end of 2016.

Economic activity revived in the second quarter, according to this morning's "advance" GDP report published by the Bureau of Economic Analysis. President Donald Trump has set an ambitious 3.0 per cent growth target for 2017.

The loonie surged on the news, jumping back above the 80-cent plateau to close Friday's trading day up 0.77 cents at 80.39 USA cents.




"Accordingly, we still expect GDP growth of 2.5%-3.0% over the rest of this year which, along with the declining unemployment rate, should leave the Fed on track to raise interest rates once more before year-end", he added. Economists track consumer attitudes closely because consumer demand drives most US economic activity.

Annual wage growth has struggled to break above 2.5 percent.

Consumer spending, which represents more than two-thirds of all USA economic output, came in at a stronger than anticipated 2.8% annual rate.

Details within Friday's report were generally positive. Overall, personal spending contributed 1.93 percentage points to the top-line growth figure of 2.6 percent, including 1.02 percent from goods spending. Economists polled by MarketWatch had forecast a 2.8% increase.

Business spending on equipment is expected to have picked up from the first quarter's 7.8 percent rate, marking a third straight quarterly increase. Personal consumption expenditures (PCE) increased 2.8%, up from 1.9% in Q1.

Growth was buoyed by investment from sectors like information technology and oil and gas, which is finally reinvesting in new infrastructure as global oil prices recover from previous lows, said Charles Seville, senior director at Fitch Ratings.

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