U.S. 1Q GDP misses forecast with no excuses.
It marked sharp improvement for the 1Q growth pace, but was 0.5% lower than the mean forecast.
To view Figure 10, please visit the following link: http://media3.marketwire.com/docs/fig10fxpr.jpg
Source: Bloomberg, FXPRIMUS
A brief breakdown of the U.S. 1Q GDP:
-- Government spending contracted 4.1% annualized, led by a 11.5% defense- spending cut.-- The main contribution was from consumer spending, marking a 3.2% growth from the 1.8% in 4Q 2012, the best quarter since late 2010.
Recent fading economic releases such as the Non-Farm Payroll (NFP), Institute for Supply Management (ISM), Consumer Confidence, together with the sequestration kicking in, 2Q growth is expected to be more modest.
This week - ISM, FOMC, and NFP will dominate.
ISM at below 51 is very likely.
U.S. manufacturing activities show less resilience after a three-month boom. For April, the Empire State Manufacturing Index and the Philly Fed survey continue shrinking, which means the ISM index will likely be below the 51 level this month from the latest 51.3.
To view Figure 11, please visit the following link: http://media3.marketwire.com/docs/fig11fxpr.jpg
Source: Bloomberg, FXPRIMUS
Federal Open Market Committee (FOMC) - Weaker data puts stimulus withdrawal off the table for the time being. Meanwhile, no major policies are expected to change from the previous statement.
The Federal Reserve (Fed) made it clear that the main purposes of Quantitative Easing (QE) target the labor market and price stabilities.
To view Figure 12, please visit the following link: http://media3.marketwire.com/docs/fig12fxpr.jpg
Source: Bloomberg, FXPRIMUS
-- Some hawkish members might have fewer reasons backing their views by the weak labor report in March; some of them predicted stronger incoming data in the March meeting.
NFP could return to a three-digit gain this month, given less initial claims.
-- Claims seemed volatile in recent months due to the seasonal adjustment for the Easter holidays. However, April claims are stabilized compared to March.
To view Figure 13, please visit the following link: http://media3.marketwire.com/docs/fig13fxpr.jpg
Source: Bloomberg, FXPRIMUS
Worse economic releases, financial conditions deteriorating, and government spending cuts will cap the labor market under pressure.
To view Figure 14, please visit the following link: http://media3.marketwire.com/docs/fig14fxpr.jpg
Source: Bloomberg, FXPRIMUS
Economic releases and policy directions could bolster the Gold price this week.
To view Figure 15, please visit the following link: http://media3.marketwire.com/docs/fig15fxpr.jpg
ABOUT MARIO SANT SINGH
Mario Singh is the Director of Training & Education at global retail Forex brokerage FXPRIMUS. He has appeared as a guest expert on CNBC more than 35 times to talk about foreign exchange markets, and is a regular contributor to top investment publications and online portals. Known as a brilliant and intense communicator with a unique ability to 'keep Forex simple' and a mission to help every man-in-the-street to trade profitably and responsibly in the Forex market, more than 20,000 people have attended his Forex trading programs. He is the only Forex trader in Asia invited to train Julius Baer Private Bankers - the third largest Swiss Bank, and ICBC, China's largest commercial bank. Mario is also author of the best-selling book, 17 Proven Currency Trading Strategies: How to Profit in the Forex Market. (Wiley Publishing).
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