By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) -The U.S. dollar rose against major currencies on Wednesday after data showed the world’s largest economy shrank in the first quarter, worse than market expectations, but better than the dire predictions touted by some of the biggest U.S. banks.
Gross domestic product (GDP) fell 0.3% in the quarter, a Commerce Department report showed in its first estimate, undermined by a surge in imports trying to frontload purchases ahead of Trump administration’s implementation of tariffs on most goods. Data showed that pre-tariff imports surged 41.3% in the first three months of the year.
The consensus forecast was for a 0.3% rise, according to economists polled by Reuters. Goldman Sachs, however, had forecast a 0.8% contraction in U.S. GDP, while J.P. Morgan predicted a 1.75% fall.
The GDP fall followed a 2.4% rise in the fourth quarter.
That said, consumer spending continued to grow, though at a moderate pace. Consumer spending on services – especially health care – grew 2.4% in first quarter as households remained resilient.
“A successful resolution to global trade policy would likely remove most of the volatility and uncertainty currently experienced by businesses and consumers,” wrote Jeffrey Roach, chief economist at LPL Financial in emailed comments.
“Moreover, the consumer is too strong to speculate the economy has dipped into recession. Outside of the trade-induced shocks to business inventory management, the economy is holding up.”
Following the data, the dollar extended gains versus the yen to trade 0.3% higher at 142.82 yen, while the euro slid 0.1% to $1.1368.
Sterling fell 0.4% to $1.3349.
Traders slightly reduced bets the Federal Reserve will cut interest rates by a full percentage point this year following the data.
Still U.S. rate futures continued to point to a start to Fed rate cuts in June, with a total of four quarter-point reductions likely, bringing the rate to the 3.25%-3.5% range by year-end.
Currency
bid
prices at
30 April
01:30
p.m. GMT
Descripti RIC Last U.S. Pct YTD Pct High Low
on Close Change Bid Bid
Previous
Session
Dollar 99.425 99.175 0.26% -8.36% 99.495 99.1
index 4
Euro/Doll 1.1365 1.1385 -0.16% 9.78% $1.14 $1.1
ar 356
Dollar/Ye 142.8 142.285 0.29% -9.31% 143.155 142.
n 2
Euro/Yen 162.25 162.04 0.14% -0.59% 162.65 161.
72
Dollar/Sw 0.8238 0.8237 0.04% -9.2% 0.8263 0.82
iss 21
Sterling/ 1.3332 1.3406 -0.53% 6.62% $1.3414 $1.3
Dollar 333
Dollar/Ca 1.3831 1.3834 -0.02% -3.82% 1.3854 1.38
nadian 18
Aussie/Do 0.6372 0.6384 -0.14% 3.03% $0.6418 $0.6
llar 366
Euro/Swis 0.9363 0.9377 -0.15% -0.32% 0.9394 0.93
s 61
Euro/Ster 0.8523 0.8489 0.4% 3.02% 0.8527 0.84
ling 83
NZ 0.5913 0.5928 -0.22% 5.71% $0.5948 0.59
Dollar/Do 04
llar
Dollar/No 10.4042 10.3491 0.53% -8.46% 10.4209 10.3
rway 469
Euro/Norw 11.8279 11.7976 0.26% 0.5% 11.85 11.7
ay 66
Dollar/Sw 9.6511 9.6153 0.33% -12.44% 9.67 9.60
eden 98
Euro/Swed 10.9705 10.9535 0.13% -4.36% 10.993 10.9
en 398
(Reporting by Gertrude Chavez-Dreyfuss. Editing by Chizu Nomiyama and Mark Potter)
