Dollar Resilient in Face of GDP Contraction

The US dollar was resilient today in face of data that showed a contraction of the US economy last quarter, the first decline since 2011. The currency fell initially after the report but managed to erase most of its losses by now.
US gross domestic product fell 1.0 percent in the first quarter of 2014 after rising 2.6 percent in the previous three months. The drop was expected by market analysts but they have not anticipated it to be so big. On top of that, pending home sales fell 9.2 percent in April from a year ago.
Not all indicators were bad. Initial unemployment claims fell from 327,000 to 320,000 last week, more than was predicted by analysts. Still, today’s data made market participants scratch their heads in an attempt to assess how it should affect monetary policy (and the dollar’s performance as a consequence) going forward.
EUR/USD traded at 1.3601 as of 22:01 GMT today after climbing from 1.3589 to 1.3625 earlier. GBP/USD was at 1.6715, near the opening of 1.6709. USD/JPY slid from 101.83 to 101.42 before trading at about 101.73.

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