US GDP Growth data beats estimates.

The US GDP data for the 3rd quarter came in at 3.5% on Thursday which beat economist estimates by a full half a percent and sent the US Dollar to fresh monthly highs against the JPY. The GDP data Thursday certainly backs up the US Fed's decision to taper the last remaining $15 Billion Dollars of stimulus and gave traders once again a reason to speculate interest rates in the US are going to rise in the middle of 2015.

Lower Oil prices and strong consumer confidence is helping drive the US economy towards more normalised interest rates in the coming years but this will happen gradually. The interest rate increases may happen gradually but I doubt the rally on the US Dollar will be gradual, I suspect it will be stronger than many are thinking.

The Key Performance Indicators are all strong for the US economy. The US Fed is no longer printing money, the government is spending less money, jobs growth is much stronger than it was, inflation is slowing rising, growth is 3.5%, oil prices are low which is helping consumer spending and the stock market is not falling out of bed which is helping investors to feel richer.  Overall its happy days ahead for now at least.

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US Fed comments spark US Dollar rally. Tapers last $15 Billion of stimulus to zero.

There was great anticipation before the US Fed released its latest monetary policy statement early on Thursday morning and Fed Chair Yellen certainly didn’t disappoint US Dollar Bulls. The Fed decided it would taper the last $15 Billion it has been printing each month to zero and also spoke positively about the US jobs market. This end a trillion dollar money printing program that was this time last year running at $85 Billion Dollars per month.
The US Fed specifically said in its statement “Labor market conditions improved somewhat further, with solid job gains and a lower unemployment rate. A range of labor market indicators suggests that underutilization of labor resources is gradually diminishing.”

Yellen spoke from both sides of her mouth as I expected saying the US Fed will raise rates if the economy keeps improving but she also said that the Fed may keep rates on hold even if the economy improves. So why did the US Dollar rise so sharply?

Yellen in her statement talked up the labor market in the US and said that "underutilization of labor resources is gradually diminishing", when in previous statements she said this was "very underutilized".

The bottom line is that traders took her statement to mean that interest rates are likely to rise sooner rather than later. 

You can read the full Official Federal Reserve Statement by clicking here. 

For the full LTG GoldRock market commentary on this Forex News item please read your LTG GoldRock Insider Report.

All eyes are on the US Fed this week.

Traders around the world will start to speculate on Tuesday and Wednesday as to what the US Fed will say when it releases its latest policy statement at 4am AEDT Thursday morning.  The market is expecting the Fed to wind back the last remaining $15 Billion a month of its QE program and thus mean the US Fed is no longer printing money. The market also expects the US Fed to give us some indication on what its forward guidance is on interest rates for 2015.

Unless the US Fed hoses down the economy this week when it announces its policy statement and Yellen openly suggests a rate rise in 2015 isn't going to happen, I suspect the US Dollar will continue to gain strength for the rest of 2014. There is the obvious world growth concerns but the US has been growing and hiring without the assistance of the rest of the world.

Don't trade with your economic eyes closed, look ahead, see what's coming and plan your trading week starting today.

You can also read LTG GoldRock Senior Trader, Andrew Barnett's comments in the media on Friday here >  https://au.news.yahoo.com/thewest/business/a/25339703/strong-us-data-weak-nz-data-weigh-on-a/ 

Big Bond investors say the US Dollar will continue to climb.

Traders at Double Line Capital LP and traders at Pimco two of the world’s biggest Bond trading firms say the US Dollar will continue to rise and the economy will grow at 4% in the years ahead. They also predict US Treasuries (Bonds) will be the place many European countries and investors will put their money for security and return in the face of a weakening European economy. They also predict the US Dollar will remain strong for several years ahead.

I agree fully with their views and based on the current economic recovery in the US and potential for higher interest rates the US Dollar will likely continue to appreciate against currencies such as the Kiwi Dollar, Aussie Dollar and emerging market currencies such as the Brazilian Real, South African Rand, Indian Rupee and Russian Ruble.

Gundlach from Double Line Capital LP told Bloomberg he expected the US Dollar to surpass the highs of 2009.

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