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 keeps sliding down
The USD/JPY currency pair opened the week with flat trade, but with the bearish momentum slightly prevailing. No changes are expected in yesterday's outlook, as risks are still skewed to the downside, as technical indicators are suggesting. The 55-day SMA and the weekly PP form a rather tough resistance around 111.40, which is likely to prevent the Greenback from recovering, but a tough demand cluster rests circa 110.35 as well. The given pair is expected to remain within this trading range of 100 pips in anticipation of the Friday's US NFP data.Daily chart
Traders' sentiment remains moderately bearish, with 58% of all open positions being short (previously 57%). At the same time, the portion of orders to acquire the US Dollar inched slightly up. The orders now take up 51% of the market.
At the moment, 55% of OANDA clients are long the US Dollar against the Yen, while the remaining 45% are short. In addition, Saxo Bank clients' sentiment once again improved, as 60% of their open positions are now long.
Spreads (avg, pip) / Trading volume / Volatility
Traders are becoming increasingly bullish on the Dollar