The United States Dollar, after a strong performance yesterday, has retraced a bit and is losing ground following a slew of economic data out of the US that gave a mixed view of the domestic economic picture.
Overview
While the final reading for Q1 GDP came in on expectations at 1.4%, personal consumption slowed a rather dramatic 0.5% from expectations and the last reading and grew only 1.5% in the first quarter of this year. By contrast, the GDP price index and the PCE price index, key readings of inflation, both printed above expectations. Durable goods orders also, for the month of May, came in above expectations on a preliminary basis, growing 0.1%. All this paints a decidedly murky picture of the economic situation in the United States.
US equity futures also slipped lower this morning after Micron Technology’s sales outlook for this year substantially disappointed investors. In the face of Nvidia’s whopper of a slide last week, US markets are rather concerned that the AI ‘bubble’ may have finally lost its luster, though such talk for now remains strongly in speculative territory. Bond yields also slid across the curve in response to this morning’s economic data, highlighting the disappointment that was such a miss from personal consumption data. The US economy ran hot all of last year, mostly from continuously high personal consumption, so a dramatically lower GDP reading in Q1 of this year is not exactly a surprise when taken in tandem with lower consumption.
This busy week is far from over, as Donald Trump and Joe Biden take the stage tonight for the first US presidential debate. Tomorrow also sees personal income and spending data, as well as the Fed’s preferred inflation gauge of PCE, the release of which promises to bring fireworks to the market.
What to Watch Today…
- US PCE Deflator Index, Friday 8:30 AM
- UK Q1 GDP, Friday
- Monex USA Online is always open.
EUR ⇑
The single currency has recovered a bit of ground against USD this morning on the heels of mixed US economic data. Political uncertainty in Europe remains in focus as the first round of France’s snap election is scheduled to take place this weekend. As of now, the far-right party coalition of Marine Le Pen stands to claim victory, followed in polling by the left-wing coalition, setting the stage for governance that is less likely to find internal compromise in the coming years. The US presidential race is also in focus for the pair ahead of tonight’s debate.
JPY ⇑
After jawboning from Japanese authorities overnight, the Japanese Yen has managed to recover a touch of ground against the USD. JPY is still, however, trading weaker than the level that spooked markets and prompted intervention from currency officials in late April and early May and is just off its 34-year weakest level reached yesterday afternoon. Markets continue to speculate that it’s possible Japan may stage yet another intervention on behalf of the currency tomorrow morning, after US PCE data and when market liquidity is low.
