The third estimate of US growth is usually not met with quite as much excitement in the market. This estimate covers a period that is already in the past, and two previous estimates have already provided an indication of growth. However, yesterday was different: the US Dollar (USD) significantly benefited from the figures, with EUR-USD falling by more than half a cent, Commerzbank's FX analyst Michael Pfister notes.

No need for interest rates to be cut rapidly to well below 3%

"The reason is obvious: the third estimate was significantly better than the previous one (3.8% instead of 3.3% in the second quarter, annualised quarter-on-quarter), and other second-tier figures also exceeded expectations. The main reason for this positive surprise was that private consumer spending was stronger than originally anticipated. This continues a long-standing trend. Back in March, I analysed US growth, breaking it down into private consumption and other components, and showed that US growth exceptionalism would not exist without private consumption. Yesterday's data confirmed this once again."

"Why is this important for the US dollar? Firstly, yesterday's data shows that the US economy is not in as bad a state as originally thought. Conversely, despite Donald Trump's continued vehement attacks on the Fed, there is no need for interest rates to be cut rapidly to well below 3%. However, this dependence on private consumption also poses a risk. If consumer sentiment declines due to a weakening labour market, growth would suffer significantly. Furthermore, while the US government would never admit it, its erratic trade policy is doing much to dampen consumer sentiment. This should be kept in mind in the coming months."