Q4 better, 2016 worse
The two sides of US GDP show their face today. While Q4 finished on a better note, 2016 as a whole saw the worst growth since 2011. Finishing at 1.6% for the year, compared to 2.5% in 2015, it doesn't exude bullishness for future Fed hikes.
A quick gloss over the US indicators so far in Q1 2017 does show a modest improvement over the numbers seen in Q4 2016 but nothing that really stands out as making a huge difference to GDP when it comes around next.
The dollar has taken on a small bid after the data but against the pound, euro and yen, the moves are piecemeal. USDCAD is the only one looking at a half decent move but is seeing the buck sold, and CAD gain on the PPI data.
With Fed members pulling multiple hike numbers out of the air (I could say another place they're pulling them from) for 2017, certainly 1.6% GDP won't justify those hikes, if that trend continues through 2017. I still maintain my view that the Fed is hiking to protect themselves from whatever horrors lie in wait down the road. If Q1 GDP does improve they'll have some ammo but anything less than 2.0% growth will probably have the market scaling down hike expectations, and that could mean no respite for the bearish tone in the dollar.
US growth needs to impress
