The market just saw Q3 GDP (Quarter ending September 30th) which originally came in at 3.5 and then revised to +3.9, revised once again this morning to 5%, yes 5%, the highest Q3 GDP since Q3 of 2003!
The $USD took off to the upside, the Yen to the downside sending USD/JPY up higher in parabolic style with the Index futures in tow looking like this...
This is truly "Good news is bad news" for the market. One of the things that really shook the market during Yellen's press conference last week was her definition of a couple meaning two, as in a couple of meetings before interest rates are hiked, but what shook the market even more is her saying it could happen BEFORE or after then, DEPENDING on the data.
Well at 5% GDP, higher than the highest estimate of 4.7%, Interest rate hikes are now a thing of surety sooner than later and from what Yellen said which includes "We keep telling what the market what we are going to do, if the market refuses to listen, I wash my hands of it", but more importantly...
Interest rate hikes could happen BEFORE then, depending on the data.
The GDP revision saw EVERY index/sub index rise, almost as if Yellen knew which she probably would have and threw out that cover of "could happen before, it's data dependent".
Q3 GDP just pulled forward interest rate hikes.
So I wonder how long it will take the market to stop chasing the USD/JPY as the $USD strengthened on the stronger print pulling the pair up and realize, "Oops, this is not good"?
I say within the hour, but that's just a guess and we've seen the market act stupidly for a longer period of time.
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