US Q1 GDP blew away forecasts for a 2.1% increase and rose 3.2%, according to the Bureau of Economic Analysis. The US dollar soared, but the gains were fleeting. EURUSD plunged to 1.1112 from 1.1135, GBPUSD dropped to 1.2878 from 1.2905 and USDJPY spiked to 112.02 after sitting at 111.75 pre-data.
Those gains evaporated as quickly as they occurred. EURUSD rallied to 1.1158, GBPUSD to 1.2924 and USDJPY sank to 111.46 as the report details revealed that most of the gains were due to high inventories. The dollar has had a great week since last Thursday’s Easter weekend close which suggests a lot of today’s post-data weakness is merely profit-taking ahead of the weekend. The better-than-expected Michigan Consumer Sentiment Index (97.2 versus a previous 96.9) may limit further dollar losses today.