US GDP Preview: The good enough growth will likely be confirmed

The final version of US Q1 GDP is likely to confirm the first read.
A drop below 2% or a rise above 2.5% would be needed to rock the boat.
The publication is set to provide a temporary relief from the trade wars.

Yohay Elam FXStreet

The United States will publish its third and final version of growth for the first quarter of 2018 on Thursday, June 28th, at 12:30 GMT. The last read is projected to confirm the second read, which showed a growth rate of 2.2% annualized.

A growth rate of 2.2% is slower than Q2, Q3, and Q4 2017, but quite upbeat for a first quarter of the year in the US. 2017 was not the only year to start on the back foot and see a pick up later. In addition, the euro-zone and the UK suffered more significant slowdowns in early 2018 and they are still trying to find their feet.

All in all, even if the slow level of growth is confirmed, it still puts the US ahead of its peers. Moreover, while countries across the pond are still recovering, data for Q2 in the US looks much promising, with some talking about a growth rate of around 4% annualized.

What results could move the US Dollar

A confirmation of 2.2% growth would likely trigger an examination of the components, first and foremost, Personal Consumption. The US economy is all around consumption. Any upgrade in this component would support the US Dollar while a downgrade would weigh on it.

Among the other positive components, an upgrade in exports would help, and so would an increase in investment. On the other hand, growth in government spending and inventories is not the kind of growth markets want. A rapid rise in inventories during one quarter usually results in a depletion of these inventories in the following one.

A change in the headline would trigger a more significant result, but the deviation will likely need to be stronger. A fall under the round number of 2% would be a source of concern even if Q2 looks promising. Such a downgrade could weigh on the greenback.

On the other hand, an upgrade to 2.5% or higher would already be very bullish for the economy and the US Dollar as well.

Trade wars

The main theme haunting markets are the tariffs and counter-tariffs that the US exchanges with its North American peers, the European Union, and China, which is currently in the limelight. Even though GDP is an overview of the economy and a top-tier figure, the emotional swings of fear and relief amid news of trade actions will likely take back control once the dust from the publication settles.

More: Trade wars: Only a stock market crash can stop Trump, 3 reasons

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.