US GDP Preview: Dollar moving in opposite direction

American economic growth is set for the largest quarterly contraction since the financial crisis. The US dollar could jump from a difficult number, in the opinion of FXStreet’s analyst Joseph Trevisani.

Key quotes

“Annualized gross domestic product (GDP), the widest accounting of national economic activity, is forecast to shrink 4% in the first quarter. Prior to the virus, the economy was running at about 2.7% according to the Atlanta Fed GDPNow model.”

“Many economic indicators point to an accelerating contraction into the second quarter. Estimates range from 5% to 30% and higher as analysts attempt to model what is truly an unprecedented economic and social event.”

“The crucial fact is how much further the economy will fall in April, May, and June. A larger than forecast shrinkage in GDP in the first quarter will force markets to confront the possibility that the decline will be deeper and longer than anticipated.”

“The depth of the GDP decline will help to establish how much damage has been done to US economic life with the dollar moving in the opposite reaction.”