US GDP Revised Higher

Quarterly GDP data from Germany, Europe's largest economy, showed expansion at a pace of 0.30% in the third quarter, while staying unchanged at 1.80% on an annualized basis. In comparison to the previous quarter, where the German economy expanded at a pace of 0.40%, the third quarter economic performance weakened from numerous angles, including the hit by the VW emission scandals and continued global trade shrinkage. Besides the GDP release, German Ifo Business Sentiment data showed a modest improvement in the month of November. The headline Ifo Business Climate Index increased to 109.0 from 108.2 in October, indicating that the economy was slowly overcoming the VW scandal which has weighed on sentiment. The Euro managed to close on a modestly bullish note yesterday, printing a higher low at 1.0619, indicating a potential correction to the upside over the near-term.

The US economy expanded more than the initial estimates of 1.50% during the third quarter, rising to 2.10% growth. However, when compared beside the second quarter's GDP expansion of 3.90%, the third quarter numbers marked a substantial downshift in economic activity. The second estimate showed that spending in the services sector was weaker, marked by downward revisions of the retail sales data. However, business fixed investment managed to come out stronger, rising 3.40%, up from 2.90% previously. Falling oil prices also took their toll in the US with drilling and mining related activities showing a decline of -47.10% during the last quarter. Despite GDP numbers revised modestly higher, financial markets were clearly unimpressed as the US Dollar softened towards the end of the session with the commodities and major currency peers posting a late rally. AUDUSD was the biggest gainer of the day, rising 0.86% to close at a 4-week high.