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The US$ fell against most major currencies Thursday as US economic growth was stronger than expected in Q-3. Real gross domestic product (GDP) grew a 3.5% annual rate in Q-3, stronger than most expectations, according to the US Commerce Department. It was the 1st increase after 4 Q’s of contraction. The report indicated that US has emerged from its longest and deepest recession in the post-war period. US Senators agreed Wednesday to extend the tax credit for 1st time home buyers and to offer a reduced credit to some repeat buyers. Treasury Secretary Tim Geithner and Housing and Urban Development Secretary Shaun Donovan gave their support to the extension Thursday. The credit has brought new families into the housing market and contributed to three consecutive months of rising home prices nationwide, Geithner and Donovan said in a statement. The Euro has been sliding in previous sessions as weak economic reports hurt hopes for recovery. The single currency rebounded Thursday as risk appetite picked up. Read more

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Crude Oil prices ended 3% higher Thursday, rallying on news that US economy grew faster than expected in Q-3, raising hopes for a speedy recovery in energy demand. Light, sweet Crude Oil for December delivery rose US$2.41, or 3.0%, to settle at US$79.87 bbl on the New York Merc. Crude Oil’s advance came as the US Commerce Department said the World’s largest economy expanded by 3.5% in Q-3 Y 2009, more than analysts previously predicted, boosting hopes that US energy demand will be soon lifted by the economic recovery. Meanwhile, strong gains on equities markets and losses in the US$ against other currencies also encouraged buying in the commodities markets. In London, Brent Crude Oil for December delivery gained US$2.28 to US$78.14 bbl on the ICE Futures exchange. Read more

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New home sales in the USA rose last month at the fastest rate since 2005, the US Commerce Department said yesterday in a report, highlighting the case that the hammered US residential real estate market is staging a recovery. Separately, official figures showed that new orders for durable goods tallied up their biggest jump in 2 years in July, as aircraft purchases soared and the US Cash-for-Clunkers program fueled a big rise in demand for automobiles. Sales of new homes jumped by 9.6% to an adjusted annual rate of 433,000 in July. The 4th consecutive monthly rise beat even the most bullish forecasts of Wall Street analysts and exceeded the revised June jump of 9.1%. New home sales are still off by 13.4% compared with the same month a year ago. Buyers are responding to low prices and the popular 1st time home buyer tax credit which has succeeded in luring people back to the market. The median price of a new home slipped a bit to US$210,100 in July and is off by 11.5% year-on-year.

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The sharp decline in the US economy is ending and recovery will come about slowly according to a report released by the International Monetary Fund (IMF) yesterday.

In an annual report on the world’s largest economy, IMF stuck to its earlier forecasts that the US GDP will contract by 2.6% in 2009 and then rise by 0.8% in 2010.

Due to the large monetary and fiscal stimulus and wide range of measures to restore the financial stability, “the sharp fall in economic output seems to be ending, and confidence in financial stability has strengthened,” the IMF said in its report after the Article IV annual consultation with US officials. However, “financial strains are still elevated and the outlook remains for only a gradual recovery, with risks still tilted to the downside,” it said.

Also on Friday, the US Commerce Department reported that the US economy fell at a more subdued 1.0% pace in the Y 2009 Q-2, a strong signal that the worst recession since the Great Depression has eased, and is coming to a close.

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