The day before

Tomorrow everything will become clear, or at least sort of clear. At 8:30 AM the U.S. Bureau of Economic Analysis will announce by how much the economy grew the last quoter. The consensus number is 3.1%, the fastest growth since the beginning of the financial crisis two years ago. And there are reasons to be optimistic. All the government stimulus measures should have had their effect by now. However, the problem with stimulus packages is that they are like antibiotics---you need to take them punctually, hope that your bacteria is not drug resistant, and be careful not to damage your kidneys when they circulate out of your system. To translate this, the government needs to continue spending, hope that the signs of recovery are not just a temporary reprieve, and hope that all this spending does not cause hyperinflation in the long run.

In other words, the tomorrow's data may actually perpetuate the uncertainty instead of dispersing it. A simple what if game:
What if the GDP turns short of the expectations?
This will mean that the unemployment has turned from a symptom of the recession into a deceases itself. Really bad scenario, which is not quite impossible--it happened in Britain. There the expected growth was .5%, but it turned out negative, -.4%. Oddly enough, I think that under this scenario the dollar may rise. The invert correlation between bad economic news and the value of the dollar has been one of the particulars of this crisis.

What if the GDP turns much bigger than expected, e.g. 5%? Then the dollar will also rise since this will signify a V-shape recovery, and the market will start prizing an interest rate hike in the near future.

I think that exactly because of this hypothetical developments the dollar is gaining presently. The uncertainty of how the GDP report will shape the market is causing a lot of profit taking. After tomorrow, however, given no surprise, the dollar can promptly go back to the 1.50 level. Lets wait and see.