The U.S. dollar is trading lower against all of the major currencies this morning in light of better than expected economic data. The North American session started with excitement thanks to a strong upward revision in third quarter GDP. The final numbers show that the U.S. economy expanded 3.1% in Q3, compared to a previous forecast of 2.7%. According to the commerce department, consumer spending, exports, state and local government spending was stronger than initially estimated. Jobless claims increased to 361K from 344K, which was right in line with expectations. Although higher jobless claims are usually indicative of weaker labor market conditions, last week’s sharp decline was also a big surprise.

Manufacturing conditions in the Philadelphia region also improved significantly with the index rising from -10.7 to +8.1, its highest level in 8 months. Existing home sales jumped 5.9%, topping 5 million for the first time in 3 years. Inventories also fell to an 11-year low as the Fed’s low interest rate policy provides continued support to the housing market. The details show that not only are inventories shrinking and more homes being sold but prices are going up as well. The only source of weakness in today’s reports were leading indicators which fell 0.2% in November, but an upward revision to the October report took some of the sting away. Overall, it has been a very good day for U.S. data. The latest economic reports paint a picture of an ongoing recovery in the U.S. economy that should only gain momentum from the Fed’s supply of liquidity. Unfortunately, stronger U.S. economic reports failed to lend much support to currencies as investors remained focused on Fiscal Cliff concerns.

Meanwhile Japanese Yen crosses have recovered nearly all of their post BoJ losses. Last night, the Bank of Japan increased asset purchases by 10 trillion yen. While they continued to provide additional support to the Japanese economy, investors were disappointed that the central bank did not take a more aggressive approach by announcing open-ended purchases or adopting a higher inflation target. Nonetheless the BoJ did say they “plan” to examine their 1% inflation goal, which suggests that they are not completely averse to raising this target next year. The fact that USD/JPY is above 84 indicates that investors are not ready to give up on their Yen shorts with BoJ monetary policy still expected to get easier over the next year.