USD Higher After GDP Revisions, Japan Retail Sales Upcoming

The US dollar made broad, modest gains after upward revisions to Q2 GDP. The pound slightly outperformed the buck while the New Zealand dollar lagged. Japanese retail sales are the highlight of Asia-Pacific trading.

US GDP grew at a 1.7% pace in the second quarter, better than the 1.5% originally reported but in-line with the economist consensus. Trade and corporate profits were large positive contributors while business investment was revised down. Inventories were also a drag on growth but that clears the way for improvement later.

The euro edged lower throughout trading but at a modest pace, sinking to 1.2530 from 1.2560. The dollar was broadly bid but the moves werent large enough to suggest genuine jitters about Jackson Hole.

The Feds Beige Book report had little to chew on and markets had almost no reaction to the anecdotal report. It was more upbeat on retail sales but downcast on employment and manufacturing. Overall characterizations of growth were slightly lower than in July.

Pending home sales rose 2.4% compared to 1.0% expected.

In Europe, Merkel reiterated that treaties do not allow the ESM to have a banking licence.

At 2350 GMT, Japan will release July retail sales. Expectations are for a 0.5% m/m contraction building on a 1.2% fall in June.

Sales have been negative in three of the past four months and with the BOJ growth downgrade earlier in the week, the risks are to the downside.

That said, this report is unlikely to move USD/JPY so close to Bernanke.

-AB