A shock US GDP reading, for Q1, initially put a panic into markets. US equities plummeted on the open, only to recover later in the day, as the numbers were digested. The Q1 US GDP number collapsed into negative territory, reading minus 0.3%, sending shockwaves into markets on the open. The numbers, when analysed, were due to a 41 % increase in imports, as importers surged imports to avoid the incoming tariff regime. The numbers were also skewed by a sharp falling Government spending, attributed to DOGE and big reductions in waste and employment. European GDP turned positive, in both France, Germany and the EU, as the single market claws the way out of a deep and extended recession. Meanwhile inflation continues to fall on both sides of the Atlantic. The US Dollar was resurgent, with the GBP falling to 1.3340, while the EUR dipped to 1.1350.Commodity currencies were hit by the resurgent reserve, with the AUD dropping below 0.6400, while the NZD has tested the downside of 0.5900. NZ Business Confidence data revealed another big setback, confirming dire conditions prevail in the NZ domestic economy. Australian inflation was steady, holding at 2.4%, allowing the RBA to probably cut rates for the incoming Government, whoever is successful in the election. Attention will turn to the Bank of Japan and their latest interest rate decision and jobs reports from the USA.
