From the US, key data for release, including the second estimate of Q2 GDP growth, jobless claims, and the July pending home sales and
advance inventory data. Q2 second estimate of GDP unchanged at 2.1% vs. 2.0% consensus. Regarding 2nd estimate of GDP growth, we don’t
expect a significant shift in the revision as offsetting move should balance out. Consumption is likely been revised higher consider the
strong July retail sales report. On the other hand, weaker government spending and widening trade balance will weigh on growth. The export
picture remains gloomy as strong USD pushes manufacturing business to Europe. Import growth is decelerating despite strong consumer
spending and wage growth. The boost provided by last year’s tax cuts is fading and concern over outlook due to trade tensions are slowing
capital spending. Yet despite grim numbers, consumption, which accounts for 70% of GPD has kept growth from moving too sharply. Tomorrow
Personal Income and Spending is likely to show that income rose by 0.4% and nominal spending 0.7%. These are solid numbers. Once again the US
consumer to supporting the USD economy in spite of broad global weakness. Yet, do fundamentals matter at this time? A single tweet by
President Trump can instantly change the fates. USD direction will be driven by macro developments specifically US-China trade
relations.
By Peter Rosenstreich
