USDIndex, Daily
While the headline figure is anxiously awaited, there will be a lot of other material to digest. The components will be scrutinized for indications of possible one-offs, including any impacts from tariff worries and a possible climb in inventories. There’s also the potential bounce from the Q1 seasonal distortions. However, there could be signs of more sustained growth via consumer spending and capex after tax reform. Note that the Bureau of Economic Analysis (BEA) will release comprehensive annual GDP revisions alongside the Q2 figures later too, which could put the Q2 number in a different light. The GDP data face annual revisions in the first Q2 GDP report each year which extend back through the prior three years. But in about every fifth year the BEA makes a broader set of revisions that include a re-basing of the “real” GDP figures, and this time it will be to a reference year of 2012 from 2009. This year’s comprehensive revisions will also include release of NSA data for GDP alongside the usual SA figures, with a better seasonal adjustment process as the BEA moves to the X-13 seasonal adjustment procedure from X-12. It’s unclear whether the seasonal pattern of Q1 GDP weakness will be diminished with the new procedure, but the market assumption is that there will be at least some improvement. The BEA also plans to release better price estimates for software, medical and communications equipment, and this last adjustment may impact the depressing effect on reported inflation last year from quality improvements (unlimited data) that appeared in the price indexes in the form of price cuts.
The President announced last night that he will be happy if the US GDP figure has a “4” in front of it – he also noted that some pundits were forecasting 5.3% , but he’s “not sure”. The real data will be released 12:30 GMT And Consensus Forecast Is 4.2%.
The USDIndex remains in a 3 month range with a top around 95.00, a key daily pivot at 94.30 and support at the 50 period moving average at 93.85.
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Stuart Cowell
Head Market Analyst
HotForex
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