Yesterday, the BEA published its preliminary first estimate of GDP for the first quarter. The report shows that GDP growth was only 1.1%, which means that the companies themselves actively invested their own revenues, while GDP growth was based on sustainable consumer spending. Yesterday's GDP report was below Wall Street analysts' estimates, which had forecast GDP growth of 2% for the first three months of the current year.
Today's PCE report is expected to show that the core PCE will increase by approximately 4.5%, and inflation for the previous month will grow by 0.3%.
The dollar rose 0.08% and settled at the 101.95 mark.
Obviously, market participants are waiting for the conclusion of the FOMC meeting and the interest rate decision, which will be published on May 3rd. There is still an overwhelming opinion that the Fed will initiate a 10th consecutive interest rate hike.
According to the CME FedWatch tool, the probability that the Fed will announce a rate hike of a quarter percentage point is 87.4%, resulting in an interest rate of between 5% and 5.25%. There remains a small portion, just 12.6% of traders who believe that the Federal Reserve will take its first pause of the year in raising rates.