Expectations were already very low towards the first release of US GDP for Q1 2015. These stood on an annualized level of around 1%. Only few had expected a marginal rise of only 0.2%. On a non-annualized basis this is a growth rate of less than 0.1% – quite meaningless.
Update: Fed decision boosts USD that sees through Q1 weakness
This could be revised lower and an outright recession could be called.
The US dollar was on the back foot before the publication and started a free fall afterwards. This isn’t a knee-jerk reaction but rather an ongoing fall. Will the Fed change the picture?
- EUR/USD: The most pronounced drop is against the euro. EUR/USD finally broke out of the 1.0450 – 1.1050 range and is trading at 1.1174. Is EUR still a sell?
- GBP/USD: Cable continued ignoring the weak GDP in the UK and continued advancing, reaching towards 1.55.
- AUD/USD that flirted with 0.80 is now well above this level at 0.8060.
- USD/CAD: The pair was flirting with the 1.20 line and broke well below it. Together with a slower than expected growth in crude oil inventories, we have an extension of the rise of the Canadian dollar.
- NZD/USD is at 0.7730, higher than earlier, but more cautious ahead of the RBNZ decision.
- USD/JPY has the least pronounced reaction: trading at 118.70. This might be the low end of the range but nothing strong like the previously mentioned pairs.
All this comes ahead of the important Fed decision. Will they acknowledge the downturn or see through it? This remains an open question, but it is becoming hard to ignore the trouble.
Here is the Fed preview: 5 key points to watch
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