The US economy expanded at a stronger-than-initially-expected pace in the March quarter; however, an economic slowdown remained on the table in the second quarter. The Commerce Department reported on Friday that Q1 GDP growth came in at a seasonally adjusted annualised pace of 1.2%, compared to an originally reported pace of 0.7%. Meanwhile, analysts expected the economy to expand 0.9% in the reported quarter.
However, that was the worst performance over the past 12 months. Back in the Q4 of 2016, the economy grew 2.1%. Analysts suggested that the Q1 slowdown was mainly driven by the US President Donald Trump's inability to boost economic growth as promised. Even though the Q1 figure was revised up sharply, weak retail sales, business investment, falls in investment inventories and an increase of the goods trade deficit destroyed hopes for a rebound in the Q2. A separate report released by the Commerce Department showed that new orders for US-manufactured durable goods dropped 0.7% last month, whereas orders for core durable goods fell 0.4%.
Upcoming events: US Core PCE Price Index, Personal Income and Spending
USD/JPY remains on the back foot
Even though Friday's fundamentals turned out to be better than expected, the Core Durable Goods Orders still weighed on the Buck, ultimately resulting in the USD/JPY pair weakening that day. As a result, the pair prolonged its consolidation, once again putting the 111.00 level to the test. Technical indicators today suggest the Greenback could attempt to pierce the 111.00 mark to the downside again, which would leave the tough support cluster around 110.30 to limit the losses in the future. Trade is likely to be relatively flat this week ahead of Friday's NFP data.Daily chart
There are 57% of traders holding short positions today, compared to 58% on Friday. Meanwhile, all pending orders in the 100-pip range are equally divided between the buy and the sell ones.
At the moment, 56% of OANDA clients are long the US Dollar against the Yen, while the remaining 44% are short. In addition, Saxo Bank clients' sentiment slightly improved over the last weekend, as 59% of their open positions are now long.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar