Forex: EUR/USD threatening 1.3000

As investors look for hints on how to price in expectations ahead of the FOMC meeting next week, today’s Q1 GDP report will provide some important context for gauging the tone of economic activity: “We expect the economic recovery to start the year on a much firmer footing than it ended 2012. And even in the midst of ever-tightening fiscal policy and an unsupportive global environment, the economy is expected to boast a very respectable 3.0% Q/Q advance in Q1, up significantly from the disappointing 0.4% Q/Q advance recorded the previous quarter”, wrote analyst Jacqui Douglas, pointing to stronger consumer spending activity as the main catalyst for the rebound in growth, which should more than compensate for the drag from lower disposable income and sequestration. “Buoyant business fixed investment and further positive momentum in residential construction activity should also bolster the bottom line. The risks to this call are tilted slightly to the upside, and are centered on the potential for a more supportive performance in inventories and net exports”, Douglas continued.