Never miss a story from Christopher Vecchio

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Christopher Vecchio

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Talking Points:

- US economy grows at a paltry +0.2% in Q1’15.

- Growth stunted by decline in consumption, exports, and business investment.

- EURUSD trades as high as $1.1071 after data releases.

After weeks of disappointing retail sales, manufacturing, and inflation data, there was little doubt that the Q1’15 US GDP figure was going to be a letdown relative to expectations for above-trend growth coming into 2015. The magnitude of that disappoint was officially measured today, with the release of the first quarter growth report, showing that the economy only grew by a meager +0.2% annualized rate. Pundits have long-held the belief that there were transitory factors in play, and a first look at the internals of the report offers some support to that belief.

The biggest drawbacks from the GDP report were the slowed rate of consumption (+1.9% from +4.4% in Q4’14), the impact of FX rates and weakened global demand (exports slid by -13.3% from +2.4% in Q4’14), and a decline in business spending (non-residential fixed investments dropped by -3.4% from +4.7% in Q4’14).

These data shed some light on the biggest concerns about the data in the first quarter: the labor strikes and port shutdowns on the West Coast, impacting trade; the strong US Dollar diminishing global demand for US goods; and inclement weather in the Midwest and Northeast impacting construction. While it’s difficult to quantify these factors specifically at present time, the internals of today’s GDP report suggest there may be some veracity to market watchers saying weakness in Q1’15 was transitory.

Here are the data that’s sent the US Dollar to fresh weekly and monthly lows today:

- USD Gross Domestic Product (Annualized) (1Q A): +0.2% versus +1.0% expected, from +2.2%.

- USD Personal Consumption (1Q A): +1.9% versus +1.7% expected, from +4.4%.

- USD GDP Price Index (1Q A): -0.1% versus +0.5% expected, from +0.1%.

See the DailyFX economic calendar for Wednesday, April 29, 2015.

EURUSD 1-minute Chart: April 29, 2015 Intraday

EUR/USD Blows Through $1.1050 after US GDP Disappoints at +0.2%

Around the data releases, EURUSD initially spiked higher to its highest exchange rates since the beginning of March (taking out the post-March FOMC swing highs in the process). EURUSD traded from $1.1010 to as high as $1.1071, before quickly fading the move to $1.1020 at the time this report was written. Similar price action was observed in other USD-pairs, with USDJPY making a round trip from ¥119.18 to ¥118.88 and back again, and AUDUSD rallying to $0.8037 from $0.8000, before settling in at $0.8015.

Read more: Trade Setups and Preview for US GDP, FOMC Meeting

--- Written by Christopher Vecchio, Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form