While there was some volatility in some pairs overnight, the greenback was largely unchanged ahead of this morning’s GDP reading.
The third and final revision of the first-quarter GDP showed that the economy grew at a strong 3.1% pace. However, the final reading fell just shy of an estimated 3.2% reading. Consumer spending, which accounts for about 70% of the economy, also fell short of expectations. The 0.9% annual growth missed projections of 1.3% which represents the slowest growth in a year. The report will be viewed as strong but the miss on consumer spending will be a cause for concern.
Attention will shift to tomorrow’s G20 meeting and Saturday’s pow-wow between President Trump and Chinese Premier Xi Jinping. There have been reports and optimism that the two have come to a tentative deal. We see it as a “fool me twice, shame on me” scenario as previous optimism has been unfounded. Nevertheless, the greenback and market sentiment, in general, will react to developments throughout the weekend.
What to Watch Today…
- Pending Home Sales at 10 a.m.
Complete Economic Calendar can be found here.
EUR/USD saw some wild swings overnight but opened today’s session close to yesterday’s closing price. The Euro initially dropped after report showed that economic confidence in the euro area dropped to its weakest level in three years. However, the common currency rebounded sharply after regional inflation in Germany ticked higher.
The Japanese yen has seen a high correlation in its price movements and trade optimism headlines. As “news” broke that China and the U.S. tentatively reached a deal to avert 300$ billion in new tariffs on Chinese imports, the yen weakened to its highest level in a week. However, once a different report showed that China will continue to insist that the U.S. will lift its ban on working with Huawei, the yen rallied back to yesterday’s ranges. The yen will continue to be a proxy for risk sentiment so expect some volatility through the G20.