US GDP for the first quarter was revised up to 0.9 percent from 0.6 percent due to the unexpected narrowing of the US trade balance. The deficit fell to $480.2 billion - a nearly six year low - but a closer look at the data isn't entirely encouraging. Indeed, export growth actually slowed markedly during the first quarter, despite broad weakness in the US dollar, while import demand actually contracted for the second quarter in a row. As a result, it's clear that domestic demand in the US is faltering amidst pessimistic business and consumer sentiment. Nevertheless, there will be a final revision to this GDP report on June 26, so traders should keep an eye on that release as well.
Meanwhile, the employment picture grew a bit dimmer this morning as initial jobless claims and continuing claims both picked up during the week ending May 24, with initial claims up 20 percent from a year ago at 372K, while continuing claims have surged 24.9 percent from a year ago to 3104K. The news does not bode well for the next round of US non-farm payrolls, and suggests that consumption will remain weak throughout the second quarter. -- Terri Belkas, Currency Analyst for DailyFX.com
