The U.S. Dollar is trading in mixed ranges again as data released this morning painted a picture of “stagflation.”
Overview
Gross Domestic Product growth for the first quarter of the year came in at 1.1% versus the 1.9% expected, while Personal Consumption also registered short of forecasts at 3.7% vs. 4.0%. While Q1 represented more spending than the previous quarter’s figure of 1.0%, but already there are signs of consumption reaching its limits in boosting the economy.
As far as inflation goes, it remains stubborn, with the Fed’s preferred gauge in Core Personal Consumption Expenditures for Q1 increasing by 4.9% instead of 4.7% as estimated. The Fed wanted to curtail demand and force a dent in economic demand, but while that has materialized to some extent, prices remain growing and at a faster pace than the intentions officials have.
Chairman Jerome Powell has been proven right that inflation is stubborn and requires more time, especially since suppliers will feel any disinflation first. The economy is certainly not hot anymore, so how long until the Fed decides to weigh options regarding policy and tools? For now, the buck is swinging with uncertainty weighing on the mind of investors who seem to switch moods often but refuse to give up on a soft landing by year’s end.
What to Watch Today…
- No major economic events are scheduled for today
- Monex USA Online is always open
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EUR ⇓
While there is no major data out of Europe or any serious headlines ahead of the May holiday weekend coming up, it is worth noting that the shared currency is losing some of its momenta after some lackluster Confidence figures surveying the suppliers and consumers. Meanwhile, the day off will not come without some digesting of GDP figures on the other side of the pond, which are expected to show that the Eurozone advanced by 0.2%. Inflation will come out on Tuesday, while the much-awaited European Central Bank meeting takes place Thursday.
GBP ⇓
Sterling is trending downward as negativity clouds the U.K., and the ability for big mergers to occur is questioned. While Brexit brought a bad spotlight on the U.K.’s willingness for global integration, the blocking of Microsoft’s merger with gaming company Activision is causing a lot of scratching of the head. Activision has called the move to prevent the $75BN acquisition a sign that the “U.K. is closed for business.” It looks like an unfriendly situation that could spark more losses for the Pound.
