Yesterday was a busy one for the US dollar, with plenty of activity of note in the markets. Significant levels were reached against sterling in particular, as the dollar tumbled to fresh four-and-a-half year lows, seeing the worst since August 2009. This came as a result of multiple influences, with the most significant being stagnating growth results from the US. The Gross Domestic Product (GDP), which is an all-round indicator of economic growth and health, came out significantly worse than expected at 0.1% for the first quarter. As a result, the US dollar weakened against the vast majority of its major counterparts. The poor GDP figure was at odds with the independent non-farm employment change figure and Chicago Purchasing Managers’ Index (PMI) which were both ahead of predictions. The Federal Reserve did as expected and reduced their programme of quantitative easing by US$10 billion to US$45 billion per month.
Although the GDP figure for the first quarter was poor, expectations are for the figure to be much better for the quarter we are now in and therefore markets will be looking forward to the key non-farm payroll data to be released tomorrow to support this belief. There is very little key data out of the US today.
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