A slightly better than expected GDP read in the USD: the economy contracted by 0.7% (annualized) in Q1 2015.
The dollar is experiencing a mixed reaction sliding a bit.
Among the details, elevated imports weigh on the GDP read, as we’ve already known from the big trade deficit. However, this isn’t too bad, as it goes hand in hand with consumer spending.
And indeed, the US consumer was not too shy in Q1: the annualized level of growth stands at 1.8%, just a tick lower from the initial print of 1.9%.
The reaction of the greenback is certainly mixed on this “within expectations” read. Nobody likes to see contraction, but the details do provide reasons to be optimistic. Will the dollar emerge as a winner from this publication?
The only notable surge of the dollar so far is against the loonie, but that’s due to a poor read from Canada.
Markets had expected the second estimate of US GDP to show an annualized contraction of 0.8% in output in Q1. The initial release showed a negligible growth rate of 0.2%, and since then data has worsened.
The US dollar was mixed towards the release.
Here is the preview: trading US GDP with EURUSD.
The Federal Reserve has already treated Q1 as weak due to “transitory” factors: bad weather, port strikes and general seasonality. The recent message from the central bank was that rates are still set to rise this year.
However, many fear that the US economy is just too weak and that a big bounce in Q2 and Q3 (like in 2014) cannot be counted on. Talk about an outright recession has also emerged.
In our latest podcast, we explain the recent USD rally, what’s ahead and lots more
Share
