Dollar Still in Range after Mixed Data, Edges Higher against Yen

Dollar spiked lower after US Q1 GDP was revised lower than expected from 1.3% to 0.6%, versus consensus of 0.8%, primarily due to smaller inventory accumulation and greater imports. That was the lowest GDP growth in 4 years. Meanwhile, Fed's preferred inflation gauge, core PCE deflator, rose at 2.2% yoy, same as previously estimated. However, downside was limited after stronger than expected Chicago PMI rebounded strongly to 61.7 in May, matching Mar's high with all sub-components up from Apr. Construction spending also beat expectation by rising 0.1% in Apr while jobless claim is solid at 310k. After all, the weakness in Q1, though worse than expected, is still priced in by the markets. Dollar is still in range against Euro, and even edges higher against yen, ahead of the more current economic data in NFP, ISM and PCE tomorrow.

On the other hand, Canadian dollar surges to new 30 year high of 1.0664 after stronger than expected Q1 GDP which grew at an annualized qoq rate of 3.7% versus expectation of 3.5%, comparing to prior upwardly revised 1.5%. The CAD is supported by expectation of further rate hike from BoC, in particular after a hawkish press release earlier this week and strength in the economy is providing a solid case for another near term hike from BoC in July.