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US Q2 GDP Data Beat Forecast; USDX Makes Fresh Highs on the Year

According to the Bureau of Economic Analysis (BEA), second quarter GDP in the US grew at an annual rate of 4.0%. This is much better than the -2.1% reading in Q1. Economists had forecast around 3.0% for Q2. 

The BEA reported: "The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures, private inventory investment, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment. Imports increased." (BEA press release).

The second quarter's GDP reading puts the Q1 GDP into distant memory, or at least proves it was simply a winter glitch. It also gives the FOMC some impetus to raise rates, perhaps before mid-2015. strong growth in Q2 makes it less likely the Fed will delay the rate hike until after mid-year. 
Traders already entered this week strong on the USD, perhaps pricing in a hawkish FOMC. The GDP data gave the greenback another boost, pushing the US Dollar Index to a new high on the year. Will the FOMC be hawkish? It seems like USD-strength will need to consolidate unless the Fed accelerates tapering, or hints at a rate hike before mid-2015. Otherwise, watch out for some consolidation ahead of Friday's US NFP report, especially with the daily RSI in the USDX pushing above 70 near 80.

(usdx daily chart 7/30)