- The ISM Services PMI rose to 51.6 in April, which exceeded the consensus.
- The US dollar started the week with a back foot around 99.50.
Economic activity in the US service sector gathered momentum in April, with the ISM Services PMI which moved to 51.6 from 50.8 in March, entering the upper estimates of 50.6 analysts.
Further details from the survey revealed that the price paying the index – a major inflation size – rose to 65.1 from 60.9, as the work index rose to 49.0 from 46.2, indicating some improvement in labor market conditions within the service industry.
Market reaction
The US Dollar (USD) was trading a marked Bearish bias on Monday, which again prevented the mid-99.00s over liberation and in the midst of an ongoing optimization of risk complicated and removal of US-China trade concerns.
GDP FAQs
A country's gross domestic product (GDP) measures its economic growth rate over a given time period, usually a quarter. The most reliable numbers were those comparing GDP to the previous quarter eg with Q2 of 2023 vs Q1 of 2023, or the same period last year, e.g. Q2 of 2023 compared to Q2 of 2022. The annual quarterly GDP figure releases the quarter growth rate if it is similar for the rest of the year. These can be misleading, however, if temporary shocks affect growth in a quarter but are not likely to last yearly – as happened in the first quarter of 2020 in the outbreak of covid pandemic, when the growth drops.
A higher GDP result is usually positive for a country's money because it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as to attract higher foreign investment. With the same token, when the GDP falls it is usually negative for money. When an economy grows people tend to spend more, leading to inflation. The central bank of the country then has to put interest rates to combat inflation with the impact of attracting more capital flows from global investors, thus helping the local currency to appreciate.
When an economy grows and GDP rises, people tend to spend more leading to inflation. The central bank of the country then has to put interest rates to combat inflation. Higher interest rates are negative for gold because they increase the cost of handling gold compared to putting money into a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for gold price.
