NEW YORK :The U.S. dollar rose against major currencies on Wednesday after data showed the world’s largest economy shrank in the first quarter, worse than market expectations, but better than the dire predictions touted by some of the biggest U.S. banks.
Gross domestic product (GDP) fell 0.3 per cent in the quarter, a Commerce Department report showed in its first estimate, undermined by a surge in imports trying to frontload purchases ahead of Trump administration’s implementation of tariffs on most goods. Data showed that pre-tariff imports surged 41.3 per cent in the first three months of the year.
The consensus forecast was for a 0.3 per cent rise, according to economists polled by Reuters. Goldman Sachs, however, had forecast a 0.8 per cent contraction in U.S. GDP, while J.P. Morgan predicted a 1.75 per cent fall.
The GDP fall followed a 2.4 per cent rise in the fourth quarter.
That said, consumer spending continued to grow, though at a moderate pace. Consumer spending on services – especially health care – grew 2.4 per cent in first quarter as households remained resilient.
“A successful resolution to global trade policy would likely remove most of the volatility and uncertainty currently experienced by businesses and consumers,” wrote Jeffrey Roach, chief economist at LPL Financial in emailed comments.
“Moreover, the consumer is too strong to speculate the economy has dipped into recession. Outside of the trade-induced shocks to business inventory management, the economy is holding up.”
Following the data, the dollar extended gains versus the yen to trade 0.3 per cent higher at 142.82 yen, while the euro slid 0.1 per cent to $1.1368.
Sterling fell 0.4 per cent to $1.3349.
Traders slightly reduced bets the Federal Reserve will cut interest rates by a full percentage point this year following the data.
Still U.S. rate futures continued to point to a start to Fed rate cuts in June, with a total of four quarter-point reductions likely, bringing the rate to the 3.25 per cent-3.5 per cent range by year-end.
Currency
bid
prices at
30 April
01:30
p.m. GMT
Descripti RIC Last U.S. Pct YTD Pct High Low
on Close Change Bid Bid
Previous
Session
Dollar 99.425 99.175 0.26 per cent -8.36 per cent 99.495 99.1
index 4
Euro/Doll 1.1365 1.1385 -0.16 per cent 9.78 per cent $1.14 $1.1
ar 356
Dollar/Ye 142.8 142.285 0.29 per cent -9.31 per cent 143.155 142.
n 2
Euro/Yen 162.25 162.04 0.14 per cent -0.59 per cent 162.65 161.
72
Dollar/Sw 0.8238 0.8237 0.04 per cent -9.2 per cent 0.8263 0.82
iss 21
Sterling/ 1.3332 1.3406 -0.53 per cent 6.62 per cent $1.3414 $1.3
Dollar 333
Dollar/Ca 1.3831 1.3834 -0.02 per cent -3.82 per cent 1.3854 1.38
nadian 18
Aussie/Do 0.6372 0.6384 -0.14 per cent 3.03 per cent $0.6418 $0.6
llar 366
Euro/Swis 0.9363 0.9377 -0.15 per cent -0.32 per cent 0.9394 0.93
s 61
Euro/Ster 0.8523 0.8489 0.4 per cent 3.02 per cent 0.8527 0.84
ling 83
NZ 0.5913 0.5928 -0.22 per cent 5.71 per cent $0.5948 0.59
Dollar/Do 04
llar
Dollar/No 10.4042 10.3491 0.53 per cent -8.46 per cent 10.4209 10.3
rway 469
Euro/Norw 11.8279 11.7976 0.26 per cent 0.5 per cent 11.85 11.7
ay 66
Dollar/Sw 9.6511 9.6153 0.33 per cent -12.44 per cent 9.67 9.60
eden 98
Euro/Swed 10.9705 10.9535 0.13 per cent -4.36 per cent 10.993 10.9
en 398
