US Economy Grows Slowly, Only 2.2%, Dollar Retreats

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The first release of US GDP for Q1 2012 shows a growth rate of 2.2%. Estimates stood on an annual growth rate of 2.6%, after a strong rise of 3% in Q4 2011. This is a big disappointment.

Also the secondary figures were lower than expected: Employment Cost Index rose by 0.4% (exp. +0.5) and the GDP Price Index rose by 1.5% (exp. 2.3%). Note that there are two official revision to this initial figure, and growth numbers can be revised later on as well.

EUR/USD is now ricking higher, in a limited manner. USD/JPY is falling towards 80.50.

EUR/USD was trading at 1.3230 before the publication, above the minor support level of 1.3212 and below downtrend resistance which currently stands at around 1.3275.

Core PCE rose at a pace of 2.1% while consumer spending was at 2.9%, which is relatively healthy.

Despite the disappointment, QE3 remains unlikely, as the economy is still growing, and there is absolutely no danger of deflation.

After seeing many positive indicators during Q1, recent figures have been more mixed, to say the least. Some of these weaker figures relate to Q1 and some to Q2. Jobs are especially worrying: the weak job gain in March was followed by a rising number of jobless claims, for three weeks in a row.

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About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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