The dollar index (DXY00) on Thursday rose by +0.64% to a 3-week high. The dollar rallied as Thursday’s US economic reports were hawkish for Fed policy. US Q2 GDP expanded more than expected, weekly jobless claims unexpectedly fell to a 2-month low, and August core (ex-defense and aircraft) capital goods new orders rose more than expected. Also, Thursday’s weakness in stocks boosted some liquidity demand for the dollar. The dollar added to its gains on Thursday on hawkish comments from Kansas City Fed President Jeff Schmid, who signaled that the Fed may not need to lower interest rates again soon, citing the need to continue bringing down inflation.
US Q2 GDP was revised upward to +3.8% (q/q annualized), stronger than expectations of no change at +3.3%. Q2 personal consumption was revised upward to +2.5%, stronger than expectations of +1.7%. The Q2 core PCE price index was unexpectedly revised upward to +2.6%, stronger than expectations of no change at +2.5%.
