The U.S. dollar rises against major currencies on Wednesday after data shows the economy shrinks in the first quarter, falling short of market expectations but faring better than the more pessimistic forecasts by some major U.S. banks.
According to the Commerce Department’s first estimate, gross domestic product (GDP) falls 0.3% in the January-March period, following a 2.4% expansion in the previous quarter. The decline is largely driven by a surge in imports, which jump 41.3% as businesses rush to frontload goods ahead of new tariffs imposed by the Trump administration.
Economists had forecast a 0.3% rise in GDP for the quarter.
Despite the contraction, consumer spending remains positive, with expenditures on services—particularly healthcare—rising 2.4% as households show resilience.
In currency markets, the dollar gains 0.3% against the yen to trade at 142.82, while the euro slips 0.1% to $1.1368. The British pound weakens 0.4% to $1.3349.
Market participants slightly reduce expectations of a full percentage point in Federal Reserve interest rate cuts this year, though futures continue to reflect a likely start to easing in June, with four quarter-point cuts anticipated, bringing the federal funds rate to between 3.25% and 3.5% by the end of 2025.
