NEWS / Foreign Exchange

US Consumer will be Key in GDP Revision

The dollar weakens across the board ahead of the preliminary US Q1 GDP report , which is expected to revise growth to the lowest level since Q4 2002. Q1 GDP growth is seen revised to as low as 0.8% annualized from the initial 1.3% estimates reported a month ago. The rise in the March trade deficit and decline in inventories are seen as the primary causes of the expected revisions. Markets will scrutinize the personal consumption expenditure component, which is seen little changed from the initial estimate of 3.8%. Thus, as spectacular as a 0.7% or 0.8% reading may appear, the consumption component will be vital in determining prospects for a US soft landing. If on the other hand the revision is largely attributed to the rising trade deficit and falling inventories, the dollar may be expected to remain stable and so are bond yields.

Also at 8.30 am is the weekly jobless claims expected to increase to 314K from 311K, with the 4-week average up to 305K from 303K.

Due at 9.45 am EST is the May Chicago PMI , expected to increase to 54 from 52.9. Any increase in the headline index is seen supporting the dollar as it implies further gains in the national ISM manufacturing index and a stability in the state of manufacturing. Manufacturing payrolls have seen net job losses in the last 10 monthly reports.

Due at 10 am EST is April construction spending , expected to come in flat after a 0.2% increase in March.

Will Euro capitalize on downward US growth ?

USDJPY remains in worrying consolidation

USDCAD my hit 1.0650 on Canada GDP

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