Will the bears continue to chomp on the Greenback? Or will this week’s catalysts bring the bulls back in the game?
Preliminary GDP (May 30, 1:30 pm GMT)
The advance GDP report printed in late April revealed that the economy had grown by 3.2%, higher than the expected 2.0% growth and the 2.2% seen in Q4 2018.
The report initially boosted the dollar, but concerns over the deceleration in price growth and business stockpiling eventually pulled the currency back down against its counterparts.
Uncle Sam’s second GDP estimate is expected to be revised down from 3.2% to 3.1% this week.
If the economy slows down even more than analysts are generally expecting, then we could see the dollar lose more pips across the board.
But if GDP surprises to the upside like it has in the past, then we could see some recovery for the dollar.
Core PCE price index (May 31, 1:30 pm GMT)
While traders will watch out for revisions in economic growth, the highlight of U.S. data this week is the core personal consumption expenditure (PCE) price index.
For newbies out there, you should know that the Fed closely watches the report for monetary policy cues. What’s more, FOMC members are also pretty touchy about consumer prices lately, which means that upside or downside surprises in this week’s release could easily spark volatility for the dollar.
If core PCE maintains its 1.3% growth or does better in April, then there will be less pressure on Fed members to cut their rates so soon after raising them consecutively just a few months ago.
If the report prints slower growth rates, however, then Governor Powell and his team might abandon their neutral stance and start communicating rate cuts in the foreseeable future. Yipes!
Missed last week’s price action? Read USD’s price recap for (May 20 – 24)!