The first estimate of US GDP for Q1 was +1.6% annualised, significantly lower than the 2.4% consensus, due to a slowdown in consumption, government spending, and a negative contribution from foreign trade and inventories.
Meanwhile, core-PCE inflation increased by 3.7% in Q1, exceeding the 3.4% prediction.
The outcomes indicate that the US economy did not perform as well as expected at the beginning of the year, with growth slowing. Yesterday, currency markets faced substantial volatility due to US data. The dollar was under some downward pressure prior to the release.
The dollar did, however, regain some ground as US rate expectations firmed marginally in the aftermath of the sticky US PCE data. Overnight, the dollar lost its gains. Sterling was firmer, as the yen sank more following the Bank of Japan’s decision to maintain its current policy.
Looking ahead, the spotlight will be on the March reading of US core-PCE. The market reaction to the report may be subdued, however, considering that the Q1 data was provided yesterday.