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From pure investor optimism to the less subjective qualification of economic health, dollar traders were prepared Friday for the advanced reading of first quarter GDP. For proxies, the Chinese growth reading for the same period had already set the pace for the emerging markets while the United Kingdom’s report lowered the bar for the G-7. However, the US holds a unique place in the ranks as the world’s largest economy with the most affluent consumer base and one of the largest financial markets. Given the tout the nation pulls, progress reports like this are market-wide events. As for the outcome of the data, the 3.2 percent annualized pace of expansion was weaker than expected (3.4 percent) and far slower than the six-year high 5.6 percent reading from the fourth quarter. However, the quality of the data showed improvement. Though the economy would grow at a faster clip in the final three months of 2009, momentum was founded in gross private investment – partially a result of government stimulus and extraordinarily low borrowing rates. Such a strong upsurge (which was largely the consequence of the previous year’s dramatic slump) would not be sustainable. Indeed, business spending would contribute 1.67 percentage points to growth where it accounted for 4.39 percentage points over the previous period. With government spending and net exports further detracting from activity, it was the consumer that would pick up the slack. The 3.6 percent expansion in personal consumption was the strongest reading since the first quarter of 2007 and steered the economy with a 2.55 percentage point contribution to the economy. More important than the historical statistics though, the shift in activity away from temporary factors like generous liquidity, government spending and inventory building to enduring aspects like consumer spending develops a sense of stability in the economy’s recuperation.

Looking ahead to next week, there are big ticket events scheduled for the US dollar and its peers; but what will be the biggest driver for the greenback? Given the currency’s sensitivity to risk appetite trends these past weeks, the passing of the EU/IMF financial assistance package for Greece could work against its safe haven status and encourage capital flows back to the euro (its primary counterpart). However, this is an uncertain element. Friday’s NFPs, on the other hand, may promise less volatility; but its timing is indisputable.