US stock index futures suggested a slightly higher open on Friday morning as market players look at a revision of first quarter GDP, as well as consumer sentiment in front of the Memorial Day long weekend.
A second reading of the US gross domestic product is scheduled to be released at 8:30 AM ET, while consumer sentiment will be announced at 10:00 AM before the Treasury market closes at 2 PM ET.
Market watchers also await comments from Federal Reserve Chair Janet Yellen, who is set to speak at Harvard University on Friday afternoon to receive an award. Yellen will be asked by Harvard professor and economist Gregory Mankiw.
US preliminary GDP report is the second release for the first quarter of 2016, which is seen to climb from the 0.5 percent reading on the advance release last month. With the Federal Reserve scheduled to meet in June, any unexpected outcome should add to the recent sentiment.
Advance GDP for the first quarter posted a gain of 0.5 percent, lower than the forecast of 0.7 percent. Now, the markets are bracing for a stronger preliminary gross domestic product, with an estimate of 0.8 percent. However, the preliminary GDP was surprisingly revised higher to mirror a yearly growth rate of 1.0 percent, while Personal Consumption rose 2.0 percent during the same period amid an initial estimate of 2.2 percent increase.The US gross domestic product is expected to expand annualized 0.9 percent.
The Personal Consumption Expenditure, which is the Federal Reserve’s preferred measure for inflation, added an annualized 1.7 percent during the past three months of the previous year, beating forecasts of a 1.5 percent increase.
With the US economy nearing a full employment, a faster growth rate may convince a greater number of Federal Reserve officials to vote for a rate increase at the next policy meeting in June, as the central bank perceives a sustainable economic recovery over the policy horizon.
Furthermore, the boost in private-sector lending together with the improvement in the housing market may reinforce the growth rate, as well as a positive development may add to the appeal of the US dollar as it puts added pressure on the Federal Open Market Committee to normalize monetary policy sooner.
Q1 US GDP’s Upward Revision to Block EUR/USD Rebound
An upward revision in the preliminary first quarter GDP report may fuel near-term sell-off in the EUR/USD pair as indications of a stronger recovery give the Federal Open Market Committee a larger opportunity to implement higher borrowing costs.
The greenback made progress after the better-than-expected GDP report, with the EUR/USD pair plunging below the 1.1000 level to close the session at 1.0924.
Release of the Federal Reserve minutes gave another boost to the US currency, which outweighed weakness in the euro. The possibility of a US interest rate hike increased significantly, leading to a bullish sentiment for the greenback.On the other hand, the overall sentiment on EUR/USD is bearish due to this sentiment.
Elsewhere in Europe, the pan European Stoxx 600 Index fell nearly 0.15 percent on Friday Morning. In Asia, Japan’s Nikkei Index rose 0.37 percent, while the Shanghai Composite closed 0.03 percent lower.
In oil markets, Brent crude slipped 1.33 percent to $48.93 a barrel. Meanwhile, benchmark West Texas Intermediate fell 0.99 percent to $48.99.