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US GDP disappointed with a rise of only 2.5% (annualized. was expected to rise by 3.1% after a weak a weak growth rate of 0.4% in Q4 2012. This is the first release. Two revisions are scheduled. Personal consumption rose by 3.2% (best since 2010), more than 2.5% that was expected. The Core PCE Inflation rose 1.2%. Continuing the trend from Q4, defense spending continued falling. Higher imports also contributed to a lower GDP number. Inventory contributed 1% to the GDP number – quite a lot, and this could boomerang in Q2.

While the level of consumption may be encouraging, this is still a big miss.

EUR/USD was flirting with the 1.30 line that characterized its trading throughout the week.  USD/JPY renewed its falls after recovering from the post-BOJ fall earlier. The US dollar is now falling.

Expectations for tapering down QE anytime soon have been put on hold. Not only did the US economy slow down after a strong start, also this strong start isn’t that strong.

EUR/USD is now at 1.3225 after reacgubg 1,3035 earlier. USD/JPY extends its falls to 98.35. GBP/USD is reaching new highs following the publication, continuing the ride on its own GDP figure.

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The yen is showing strength against other currencies as well.