Data on reduction of the U.S. GDP in Q1 2014 by 1.0% have become the unexpected negative for the market. Analysts had expected the economy to fall by 0.6%. Among the reasons for the decline some experts call the bad weather conditions this winter, and expect increased growth in the second and third quarters. On the other hand the dynamics of GDP was negatively impacted by the strengthening of the U.S. dollar and a decline in the competitiveness of American goods, which has led to an increase in the trade deficit of the country.
Despite the negative trend of GDP, we see an improvement on the labor market, which should support the demand for goods and most importantly to increase home sales. At the same time, we believe that the U.S. market is overbought and expect correction of the major indexes due to the lack of reasons for continued growth.
Wish you the profits!
FXFINPRO Capital Analytical department.