By Matthew Kerkhoff
The dollar rallied over the past 10 months as the US economy appeared to reach breakout speed and the prospect of higher interest rates drew nearer. But the latest reading on US GDP shows that investors bidding up the strength of the dollar may have done the Fed’s work for them, effectively tightening economic conditions.
Before we get into the dollar, let’s take a look at a breakdown of various GDP components to understand where the strengths and weaknesses lie. Real GDP for the 1st quarter was reported at 0.2%, but as always, remember that this is just an initial reading and it will be revised. Last year, for example, the initial first quarter reading was 0.1%, but that was eventually revised to show a contraction of 2.1%. It’s unfortunate that the data we have is not entirely accurate, but this is the information that the financial markets are operating ... Log in or subscribe to continue reading.