29 Apr 2015
US growth disappoints, dollar pays price – BBH
FXStreet (Barcelona) - Mark Chandler, Global Head of Currency Strategy at Brown Brothers Harriman, reviews the US GDP release, noting that the Dollar faced the brunt of much weaker than anticipated Q1 growth data, with investment falling 2.5%, seeing the biggest decline since 2009.
Key Quotes
“The US economy essentially stagnated in Q1, with the economy expanding 0.2% at an annualized rate. The Bloomberg consensus was a for 1% expansion, but we warned of downside risks.“
“The dollar, already under pressure, fell further. The euro has took out the $1.1050 level and sterling has moved above $1.54. The dollar failed to sustain gains above JPY119.00. However, with debt market shrugged it off and the dollar stabilized at lower levels.“
“It was a poor quarter across the board. Consumption, which jumped 4.4% in Q4 14, slowed to 1.9%, which was slightly above expectations.”
“Investment fell 2.5%. It is the biggest decline since the end of 2009. It appears that no other sector has managed to pick up the slack created by the investment cuts in the energy sector. Investment in oil and mining collapsed at a nearly 49% annualized pace.“
“Government spending did not help. State and local governments cut spending by 1.5% at an annualized pace. Spending by the Federal government rose at a 0.3% pace. Net exports were a drag, subtracting 1.25% off GDP, the largest in a year. The trade deficit widened to $522 bln from $470 bln in Q4 14. Price pressures remained modest. The core PCE deflator rose 0.9%, the smallest rise in five years.”
Key Quotes
“The US economy essentially stagnated in Q1, with the economy expanding 0.2% at an annualized rate. The Bloomberg consensus was a for 1% expansion, but we warned of downside risks.“
“The dollar, already under pressure, fell further. The euro has took out the $1.1050 level and sterling has moved above $1.54. The dollar failed to sustain gains above JPY119.00. However, with debt market shrugged it off and the dollar stabilized at lower levels.“
“It was a poor quarter across the board. Consumption, which jumped 4.4% in Q4 14, slowed to 1.9%, which was slightly above expectations.”
“Investment fell 2.5%. It is the biggest decline since the end of 2009. It appears that no other sector has managed to pick up the slack created by the investment cuts in the energy sector. Investment in oil and mining collapsed at a nearly 49% annualized pace.“
“Government spending did not help. State and local governments cut spending by 1.5% at an annualized pace. Spending by the Federal government rose at a 0.3% pace. Net exports were a drag, subtracting 1.25% off GDP, the largest in a year. The trade deficit widened to $522 bln from $470 bln in Q4 14. Price pressures remained modest. The core PCE deflator rose 0.9%, the smallest rise in five years.”