The US final Q1 GDP reading came in well below estimates, at -2.9% (versus -1.8% anticipated), while durable goods orders also disappointed. This saw the US dollar index drift back towards the 80 level as the greenback loses ground to some of the majors. While the market feels the US economy will see a rebound in Q2, it also seems the disappointing reading helped nullify some of the hawkish comments made by Fed members earlier in the week.
AUD and GBP remain firm
The most significant moves were in AUD/USD and GBP/USD as risk currencies gained ground against the greenback. Both pairs just continue to find buyers on dips at the moment and managed to pop back above key levels in US trade. AUD/USD traded back above 0.9400 after finding support in the mid-0.93 region.
There has been hardly any data out of Australia this week but good demand for Australian bonds has just kept the local currency bid. Perhaps the recovery in metals has also helped push the commodity currency higher. Traders will continue to eye April highs in the 0.946 region, while buying dips is likely to remain the preferred strategy.
GBP/USD popped back above 1.7000 and is in for another bid day with BoE Gov Carney speaking on the financial stability report. Perhaps his comments will offer more clarity on the current uncertainty around rates and what the trigger for a rate hike will be. The pair’s recent high was at 1.7060 and this is likely to act as near-term resistance.