US expected to dodge technical recession with weak second-quarter growth – FT

Anil Panchal FXStreet

The Financial Times (FT) quotes a Bloomberg survey of economists to raise expectations that the US may avert technical recession during its flash readings of the Q2 Gross Domestic Product (GDP) Annualized, expected 0.4% versus -1.6% prior, scheduled for Thursday.

“The US is expected to report weak second-quarter growth on Thursday following a contraction in the first three months of the year, avoiding a so-called technical recession but still reflecting a slowdown in the economy,” said FT.

The analytical piece also mentioned that a technical recession is defined as two consecutive quarters of GDP contraction. However, the US does not use this definition and instead relies on a determination by a group of researchers at the National Bureau of Economic Research, based on a broader range of factors.

Key quotes

Weak GDP data is unlikely to change the Fed’s calculus for now, economists say. In his press conference after Wednesday’s policy meeting, chair Jay Powell said he did not believe the US was in a recession and pointed to strength in the economy, including in the labor market.

Despite the consensus forecast of 0.5 percent, several big banks including Barclays, Bank of America and UBS are betting the economy will have shrunk for a second consecutive quarter.

The Atlanta Fed’s GDPNow forecast, a dynamic estimate of real GDP growth based on the most current economic data, shows a contraction of 1.2 percent.

Also read: US GDP Preview: Win-win for the dollar? Economy's flirt with recession to boost the buck

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

EUR/USD stays defensive below 1.1900 as USD recovers

EUR/USD trades in negative territory for the third consecutive day, below 1.1900 in the European session on Thursday. A modest rebound in the US Dollar is weighing on the pair, despite an upbeat market mood. Traders keep an eye on the US weekly Initial Jobless Claims data for further trading impetus.

GBP/USD holds above 1.3600 after UK data dump

\GBP/USD moves little while holding above 1.3600 in the European session on Thursday, following the release of the UK Q4 preliminary GDP, which showed a 0.1% growth against a 0.2% increase expected. The UK industrial sector activity deteriorated in Decembert, keeping the downward pressure intact on the Pound Sterling.

Gold sticks to modest intraday losses as reduced March Fed rate cut bets underpin USD

Gold languishes near the lower end of its daily range heading into the European session on Thursday. The precious metal, however, lacks follow-through selling amid mixed cues and currently trades above the $5,050 level, well within striking distance of a nearly two-week low touched the previous day.

Cardano eyes short-term rebound as derivatives sentiment improves

Cardano (ADA) is trading at $0.257 at the time of writing on Thursday, after slipping more than 4% so far this week. Derivatives sentiment improves as ADA’s funding rates turn positive alongside rising long bets among traders.

A tale of two labour markets: Headline strength masks underlying weakness

Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.

Sonic Labs’ vertical integration fuels recovery in S token

Sonic, previously Fantom (FTM), is extending its recovery trade at $0.048 at the time of writing, after rebounding by over 12% the previous day. The recovery thesis’ strengths lie in the optimism surrounding Sonic Labs’ Wednesday announcement to shift to a vertically integrated model, aimed at boosting S token utility.