Revised GDP Results Tank Dollar
The U.S. Dollar Index remained within striking distance of a 1-month trough after news that first quarter growth figures for the U.S. economy came back with a downward revision.According to the U.S. Bureau of Economic Analysis, in Q1, the economy grew at -2.9% against expectations of an improvement (from -2.6%) to -1.7%; that quarterly decline was the worst drop seen in five years. The news sent yields on 10-year benchmark treasuries to 2.529%, a 3-week low and spurred bearish positions in the U.S. Dollar.
As reported at 11:35 a.m. (JST) in Tokyo, the U.S. Dollar Index was trading at 80.091 .DXY, close to the low established on May 22nd. The EUR/USD pair traded at $1.3652, a fresh 3-week peak, while the AUD/USD recovered from a 1-week trough to trade at $0.9402. The GBP/USD also improved to $1.6984, moving off a 1-week trough and the CAD/USD traded near a 5-month high at C$1.0716.
Dollar Pressure Likely Short-Lived
In a note to clients, BNP Paribas’ analysts said that the GDP news was likely to set back the U.S. Dollar but that losses would be limited and temporary especially as the Federal Reserve had already recognized possible distortions and headwinds to the first quarter outcome.