Article Highlights

  • U.S. advance GDP at 0.5% vs. 0.7% forecast, 1.4% previous
  • U.S. initial jobless claims at 257K vs. 258K estimate
  • New Zealand building consents slumped by 9.8%
  • U.K. GfK consumer confidence index dropped from 0 to -3
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Traders showed no love for the Greenback after the downbeat U.S. advance GDP reinforced the Fed’s downbeat views.

Major Events:

U.S. advance GDP release – As the FOMC mentioned in their latest policy statement, economic growth appears to have slowed down. The advance GDP reading, which provides the first glimpse into how the U.S. economy fared for the past quarter, printed a mere 0.5% growth figure – its slowest pace of growth in two years! – versus the projected 0.7% expansion. This is also much weaker compared to the Q4 2015 GDP of 1.4%.

Components of the report revealed that the slump in business investment was mostly to blame for the weak reading, as global financial volatility and a cloudy outlook for the oil industry weighed on investor confidence. Consumer spending also slowed from 2.4% in the last three months of 2015 to just 1.9% in the first quarter of this year.

Yen bulls’ after-party – Yen bulls just wouldn’t stop painting the forex town red, as they continued with their post-BOJ party until the New York trading hours. If you recall, the Japanese central bank refrained from taking any monetary policy action or currency intervention, contrary to what most market watchers were expecting.

Major Currency Movers:

USD – The U.S. dollar was generally weaker against its forex counterparts, as the bleak GDP reading dashed hopes for a June rate hike.

EUR/USD pulled back to a low of 1.1311 before climbing to 1.1365, GBP/USD found support at the 1.4550 mark then rallied to 1.4630, USD/CHF continued its slide to a low of .9655, and USD/CAD broke below the 1.2550 minor psychological level.

JPY – The Japanese currency raked in more gains throughout the day after yen bulls cheered the BOJ’s decision to sit on its hands.

USD/JPY stalled around the 108.00 handle for a while then broke down to 107.80, EUR/JPY consolidated briefly at 123.00 then resumed its drop to 122.50, GBP/JPY is down to the 158.00 mark, AUD/JPY dipped to a low of 82.12, and NZD/JPY is finding support at 75.00.

Watch Out For:

  • Japanese banks closed for the holiday
  • 1:00 am GMT: New Zealand ANZ business confidence (3.2 previous)
  • 1:30 am GMT: Australia’s PPI q/q (0.2% expected, 0.3% previous)
  • 1:30 am GMT: Australian private sector credit (0.5% expected, 0.6% previous)

See also:

Asian Session Recap

London Session Recap

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