USD – Prelim GDP Could Grab Headlines

The USD experienced a wide trading pattern on Wednesday as it started the day in a weaker mode, but finished on the stronger side of its range. Caution was again the byword surrounding investors who clearly remain unconvinced about the waters they are attempting to swim. The EUR centric saga shows no willingness to vanish and the economic data that was released from the States yesterday was mixed. The Durable Goods figure turned in a rather perplexing bag of tricks, while it showed the broad number enjoyed an improvement, in fact the Core statistics proved disappointing. New Home Sales enjoyed a good jump to 504k, exceeding the estimate of 425k, but questions remain about the growth prospects for the housing sector. Today the Prelim GDP will be released from the U.S. and it is anticipated to produce a gain of 3.5%. Also on the agenda are weekly Unemployment Claims, which are expecting an improvement.

Taking into consideration that the previous GDP report was slightly more negative than forecasted and that the weekly Unemployment Claims gave investors a fright last week; today could produce volatility based on these publications if any cracks in the armor appear. And there will be additional concerns too because of the impending long weekend. Trading will be open tomorrow, but the market will likely see less volume because of the upcoming Memorial Day holiday on Monday. There will be economic data on Friday with Consumer Sentiment readings, but traders should be ready for volatility today from both the currencies and the equity markets as investors perhaps try to square their books today. The European financial crisis continues to stagger sentiment globally, but the Revised GDP statistics could cause genuine movement with any surprises. The USD has experienced a solid trend versus the EUR and GBP, but this does not mean that the U.S. economy has no warts. The next two days of trading should prove noteworthy.

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