US Dollar Declines on GDP Revisions, Eyes on Upcoming PCE Data

US Dollar Declines on Weaker GDP and Core PCE Data: The US dollar fell against most major currencies, and government bond yields declined in the early American session on Thursday after Q1 GDP growth was revised lower to 1.3% from 1.6%.

GDP and Spending Revisions: Headline GDP met expectations but included downward revisions in consumer spending, private inventory investment, and federal government spending estimates.

Q1 GDP Second Estimate: Headline GDP was revised down to 1.3% from 1.6%. The Price Index remained stable at 3.1%. Headline PCE eased to 3.3% from 3.4%, and core PCE dropped to 3.6% from 3.7%.

Weekly Jobless Claims: Initial claims grew to 219,000 from 216,000, while continuing claims rose slightly to 1.791 million, below expectations.

Implications for Future PCE Readings: The weaker PCE prices might lead to downward revisions of earlier Core PCE price index readings when the data for April are released on Friday. The index is expected to rise 0.3% month-over-month and 2.8% year-over-year in April.

Upcoming Key Inflation Data: The week’s main highlight for markets is Friday’s U.S. core personal consumption expenditures (PCE) price index report, the Fed’s preferred inflation measure. A softer-than-expected PCE report could be a welcome surprise, while further increases in inflation might reduce risk appetite.

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