US Dollar Mixed after Surprise Q1 Data
The US dollar was mixed against its major trading partners early Friday — up versus the euro and yen, down versus the pound and Canadian dollar — ahead of data on personal income, spending and personal consumption expenditures price data for March.
The slowdown in US 1Q growth was quite substantial: in one quarter, the annualised growth rate was more than halved from 3.4% to 1.6% (consensus was 2.5%) said ING in a Friday note.
Interestingly, consumer spending was quite weak too: 2.5% annualised versus a consensus 3.0%. What matters more for the Federal Reserve, however, is that core PCE inflation came in much higher at 3.7% QoQ annualised, from 2.0% in 4Q and above the 3.4% consensus.
The first look at Q1 GDP on Thursday led to fears of stagflation as economic growth was slower than expected and the price measures accelerated, depressing financial markets. Fed officials remain in their ‘quiet period’ through the April 30-May 1 Federal Open Market Committee meeting.
A quick summary of foreign exchange activity heading into Friday showed that USDEUR fell slightly to 1.0728 from 1.0730 at the Thursday US close but was above a level of 1.0724 at the same time Thursday morning. Eurozone private sector loans rose modestly in March while loans to corporations accelerated, data released earlier Friday showed. The next European Central Bank meeting is scheduled for June 6.
GBPUSD rose to 1.2518 from 1.2513 at the Thursday US close and 1.2509 at the same time Thursday morning. UK consumer confidence improved slightly in April but continued to indicate more pessimism than optimism, data released overnight showed. The next Bank of England meeting is scheduled for May 9.
USDJPY jumped to 156.8281 from 155.6529 at the Thursday US close and 155.5207 at the same time Thursday morning in response to the Bank of Japan holding its target rate steady near zero, offering no clues that further rate increases are imminent, and downgrading its 2024 economic growth forecast in its post-meeting statement overnight. The next BoJ meeting is scheduled for June 13-14. Tokyo consumer prices, an early indicator of overall Japanese prices, slowed their pace in April.
USDCAD fell to 1.3653 from 1.3658 at the Thursday US close and 1.3672 at the same time Thursday morning. Canada manufacturing and wholesale sales data are scheduled to be released at 8:30 am ET. The next Bank of Canada meeting is scheduled for June 5. NCS Begins Sensitisation to Automated Retiree Verification System
