US Q1 GDP, US Dollar Analysis and Charts

• US Q1 Q/Q GDP misses expectations.
• Personal Consumption Price Index (PCE) beats estimates.
• US dollar slips then picks up.

US growth remains positive but the advanced look at Q1 GDP showed output slowing. The Q/Q headline figure of 1.6% missed market forecasts of 2.5% and was less than half the 3.4% seen in Q4 2023. The second estimate of US Q1 GDP will be released on May 30th.

While the lower-than-expected GDP figure would bring rate cuts back to the fore, the price index for gross domestic production rose sharply compared to the prior quarter.

According to the US Bureau of Economic Analysis, ‘Theprice index for gross domestic purchasesincreased 3.1 percent in the first quarter, compared with an increase of 1.9 percent in the fourth quarter (table 4). Thepersonal consumption expenditures (PCE) price indexincreased 3.4 percent, compared with an increase of 1.8 percent. Excluding food and energy prices, the PCE price index increased 3.7 percent, compared with an increase of 2.0 percent.’

The US dollar fell on the GDP figure but turned around straight away as traders factored in the PCE increases. Today’s release is unlikely to see US rate cuts bought forward with the market now fully priced for a 25 bp cut in November.

The US dollar is back above 1.0600 and eyes the recent multi-month high at 106.50.

US Dollar Index Daily Chart

Chart by TradingView

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