US Q1 GDP Misses Forecasts, PCE Beats Estimates, US Dollar Moves Higher

US Q1 GDP, US Dollar Analysis and Charts

• US Q1 Q/Q GDP misses expectations.
• The Personal Consumption Price Index (PCE) beats estimates.
• US dollar ties then picks up.

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US growth remains positive but the advanced look at Q1 GDP showed output slowing. The Q/Q headline figure of 1.6% missed market forecasts of 2.5% and was less than half the 3.4% seen in Q4 2023. The second estimate of US Q1 GDP will be released on May 30th.

While the lower-than-expected GDP figure would bring rate cuts back to the fore, the price index for gross domestic production rose sharply compared to the previous quarter.

According to the US Bureau of Economic Analysis, ‘The price index for gross domestic purchases increased 3.1 percent in the first quarter, compared with an increase of 1.9 percent in the fourth quarter (table 4). The personal consumption expenditures (PCE) price index increased 3.4 percent, compared with an increase of 1.8 percent. Excluding food and energy prices, the PCE price index increased 3.7 percent, compared with an increase of 2.0 percent.’

The US dollar fell on the GDP figure but turned around straight away as traders factored in the PCE increases. Today’s release is unlikely to see US rate cuts bought forward with the market now fully priced for a 25 bp cut in November.

The US dollar is back above 1.0600 and eyes the recent multi-month high at 106.50.

US Dollar Index Daily Chart

Chart by TradingView

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