- The US dollar is trading against most major currencies.
- The initial US GDP reading for the first quarter became negative.
- The US dollar index is trapped below the 100.00 level of cycle in advance of the US key data.
The US dollar index (DXY), which monitors the US dollar (USD) performance against six major currencies, trading at 99.30 at the time of writing on Wednesday. The greenback is not really going anywhere as investors remain on the sideways against major data releases in the American session. US president (US) Donald Trump signed an executive order to ease the tariff impact on car parts and, during a rally in Detroit, which appeared in the Federal Reserve Chairman Jerome Powell Again, Trump's expression is more aware of interest rates than Powell does.
In Economic calendar front, a general practice will take place this Wednesday in advance of Nonfarm Payrolls Exit Friday. The US Gross Domestic Product (GDP) Preliminary reading for Q1 will be an important element to assess the first effect, if any, of the administration's tariff policy. And reading is a very much -bearish print, with a GDP that falls back by -0.3%, losing a positive 0.4% expected.
Sun -Sun Digest Market Movers: Reviewing is afraid to appear
- Preliminary reading of the first quarter for US Gross Domestic Product saw the annual rate falling down by 0.3%, losing the growth of 0.4% and slower than the 2.4% expansion visible in the four quarter of 2024. Entering 3.6%, from 2.4% in the last quarter of 2024. The Core PCE came in red to 3.5%, from 2.6% to the previous quarter. It can also be seen as stagflation.
- At 13:35 GMT, the Chicago purchase manager index for April should be. The expectations are for an additional retreat to 45.5 from 47.6.
- At 14:00 gmt, the monthly PCE data for March will also be released. The monthly core PCE is expected to enter 0.1%, down from 0.4%. The monthly headline number is expected to fall to 0%, from 0.3% previously.
- Equities dive down to NASDAQ's futures that dropped 1.6% leading to the opening of the US bell. European equities are unrelenting and flat flat.
- The CME Fedwatch's tool shows the chance of an interest rate cut by the Federal Reserve at the May meeting stands 7.6% against a 92.4% possibility of no change. The June meeting sees a 65.1% chance of a cutting rate.
- The US 10-year yields trade around 4.20%, eliminating earlier sinking in yields and precautions in cut cut bets.
US Dollar Index Technical Analysis: Watch the Lag Effect
US Dollar Index (DXY) begins to choose from the low level of 2025. The bulls are slowly starting to control the chart. However, risk elements continue to be uncertain and possible further degradation of US data that is likely to cause lower DXY.
Upside down, DXY's first resistance came to 100.22, supporting DXY back in September 2024, with a break back above the 100.00 level of cycle as a bullish signal. A recovery firm was a return to 101.90, which acted as a pivotal level throughout December 2023 and again as a basis for the reverse formation of head-and-shoulders (H&S) in the summer of 2024.
On the other hand, the support of 97.73 can be quickly diagnosed with any large bearish headline. In addition, a relatively thin technical support enters 96.94 before viewing the lower level of the new price range. It is at 95.25 and 94.56, which means fresh lows that have not been seen since 2022.
US Dollar Index: Daily -Taral chart
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.
