US Dollar (USD) Outlook Uncertain Following Poor US GDP Data, Falling Confidence

April 29, 2016 - Written by John Cameron

STORY LINK US Dollar (USD) Outlook Uncertain Following Poor US GDP Data, Falling Confidence

The US Dollar has been poor against its peers recently, on account of the finalised University of Michigan confidence score for April falling from 89.7 to 89 points.

Weak US GDP Weighs on US Dollar Exchange Rates

The US Dollar (currency : USD) suffered significant downside in the markets yesterday afternoon following the publication of a far weaker than anticipated set of quarter one Gross Domestic Product numbers. Analysts had been forecasting a result pointing to domestic growth of 0.6% during the first three months of this year – down significantly from Q4 2015’s outcome of 1.4%. When the figure which was released showed growth of a relatively paltry 0.5%, FX insiders began to amend their forecast for the near-term performance of the Greenback.

Analysts laid the blame for the lower levels of US growth firmly at the feet of the historically strong US Dollar during the period, while weaker US aggregate demand added to the poor economic performance Stateside. The Pound US Dollar exchange rate edged higher in the aftermath of the print and there could be further upside to come for the pair. However, a move back to the 1.45000s is considered unlikely in the short-to-medium term for Cable.

Chris Williamson of Markit put the US GDP data in context, stating that, ‘worryingly, the surveys indicate that the malaise affecting the US economy has extended into the second quarter, albeit with the pace of expansion picking up slightly to 0.8%. The surveys also show weakness spreading from manufacturing to services in recent months.’

The poor US GDP statistics triggered a subdued performance for global equities yesterday afternoon. Investors were already in a ‘risk-off’ mood following the overnight decision by the Bank of Japan (BoJ) not to adopt further policy loosening measures.

NOK, CAD Exchange Rates Advance as Oil Prices Rise

Elsewhere, it was another good day for the Norwegian Krone (currency : NOK) and the Canadian Dollar (currency : CAD).

Oil prices climbed for the third session on the trot as investors priced-in the latest report from the US Energy Information Administration (EIA) which revealed that production of ‘Black Gold’ Stateside shrank for the seventh successive week last week.

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