US Dollar Halts Losses Despite First GDP Decline in 3-Years

Talking Points:

• US GDP declines for first time in 3-years
• Initial and continuing jobless claims fall in May
• USD/JPY as bad news appears dated

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The US economy contracted on a quarterly basis for the first time in three years, according to the second estimate of the Q1 GDP released by the Commerce Department. The 1% annualized decline in economic output followed a 2.6% annualized rise in GDP in the final quarter of last year.

Both Federal Reserve officials and business managers have blamed much of the first quarter slowdown on the unusually severe winter conditions. Furthermore, the Fed said in its April meeting that growth in economic activity had picked up between March and April. Because the first quarter data is almost two months old, the revision may not affect Federal Reserve monetary policy, which may be why the US Dollar ignored the release and rose in Forex markets.

USD/JPY 1-Minute: May 29, 2014

The US Dollar gained 20 pips against the Japanese Yen following the release and approached resistance by the daily open at 101.86. Currency Strategist Ilya Spivak warns that USD/JPY may continue to face resistance around 102.00.

USD/JPYDaily by Ilya Spivak

Charts created by Baruch Spier and Ilya Spivak using Marketscope 2.0. Add DailyFX Support/Resistance to your charts at FXCM Apps.

-- Written by Baruch Spier, DailyFX Research. Feedback can be sent to [email protected] .