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Daily Review 08.12.2016

Japan Revises down Q3 GDP as Business Spending Drops

Japan unexpectedly cut its reading of third-quarter economic growth to an annualized 1.3 percent, revised down from an initial reading of 2.2 percent annualized growth.

The revision was driven by drops in business spending and in private inventories.

Economist said, the government adopted a new base year for calculating gross domestic product that led to changes in previous data and made forecasting revised third-quarter GDP more difficult.

The new calculation method, which include and development in capital expenditure for the first time, has been applied to GDP data going back to 1994.

The new methodology will bring Prime Minister Shinzo Abe a bit closer to his goal of expanding GDP to 600 trillion yen. But, it won’t fix the problems in Japan’s economy, which has swung between modest growth and contraction in recent quarters. Domestic consumption and wage growth remain dull. Exports, on the other hand, are showing signs of a recovery, and these companies should receive a boost from the yen’s decline following President-elect Donald Trump’s win last month.

Euro rises, hangs near three-week-high as focus turns to ECB

The euro stood firm near a three-week high versus the dollar on Thursday, as investors turned their attention to the European Central Bank’s policy meeting later in the day, as the dollar was drawn down by a drop in U.S. bond yields.

The euro has been the main focus for traders this week after Italian Prime Minister Matteo Renzi said he will resign after suffering a bitter defeat in a referendum on constitutional reform.

The euro edged up 0.2 percent to $1.0769 after gaining 0.3 percent on Wednesday. It was trading within sight of Monday’s peak of $1.0797, its highest level since November 15.

The dollar index stood at 100.09, down from Wednesday’s intraday high of 100.60.

The dollar eased 0.1 percent versus the yen to 113.62 yen.

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