Though the FX market was overwhelmed by US data this morning, the overall sentiment generated by the wave of numbers was largely unchanged from pre-release conditions. Even the promise of an overriding GDP revision fell short of expectations, leaving conditions primed for another fundamental flood for Friday.

From the charts, it was clear that the morning’s indicators wound up considerable expectations even though the action that followed was directionless. From EURUSD, the morning swing higher accelerated in the US session all the way to 1.3475 before loosing its way and reverting to a 40-point range. The British pound was more consistent in taking advantage of the dollar’s vulnerable situation. GBPUSD has staved off ranges to push a two wave, 80-point advance to 1.9815. Currently hovering at the same level it closed yesterday’s US session, USDCHF traced out a 40-point swing that sustained the choppy conditions that have dominated the pair since the 21st. Finally, USDJPY drew the crowds when spot surged through 121.80 support, though a pullback before 122 kept momentum sidelined.

One serious obstacle to calm markets has passed; with another dead ahead. The trading masses were undoubtedly crowded around their terminals this morning to receive the lengthy list of economic indicators scheduled for release. Inferring from speculation prior to the opening of the flood gates, the GDP revision clearly cornered the market for potential event risk. In its advanced release, the first quarter growth report disappointed the market when it crossed the wires with a 1.3 percent annualized pace of growth - below the 1.8 percent clip expected. As time passed and more data came in, economists lowered their expectations for its second reading. The consensus for today’s number was pegged at a lowly 0.8 percent, though the dour outlook for near-term growth likely positioned the unofficial outlook even lower. So, when the GDP number printed a fresh four-year low 0.6 percent annualized pace of growth, traders were somewhat prepared. From a long-term fundamental view the economy’s crawling pace, is distressing; and a downturn in any of the major veins of growth (consumer spending for example) could finally usher it into a preliminary recession.

After the GDP number was fully absorbed into dollar price action, traders moved onto the many other releases crossing the wires. Handling the sensitive housing sector, an April Construction Spending report for April and a first quarter House Price Index only confirmed the market’s ailment. The inflation number’s modest 0.1 percent was notable since it precedes the massive 10.8 percent drop in new home prices last month. Another set of indicators that drew interest, specifically ahead of tomorrow’s market-driving NFP report, was the weekly jobless claims and April Help Wanted Index for April. The four-week moving average on first time claims is still very close to its one-year low, though it recently stepped up from the extreme last week. The only true surprise from the whole mix was the Chicago PMI survey for May. Matching a two-year high, the business activity gauge offers a last minute boost to speculation surrounding tomorrow’s ISM survey.

Considering tomorrow’s calendar, those traders who felt they missed out on big trades this morning will have a second chance at big moves and breakouts. The unusual confluence of the ISM and NFP release could produce an interesting response from the dollar. Similar surprises could spark big breakouts, while offsetting or neutral reads could render the data impotent. While the economic calendar could decide short-term action, there are other issues to keep in mind for the dollar’s long-term health. An article from the Financial Times yesterday reported on a piece of legislation that Senate leaders are just finalizing that seeks to reverse the long-standing US policy to avoid currency intervention. While it still has a ways to go and considerable opponents in the president and Treasury secretary, it just provides further evidence of trade strains between the US and the world.

The benchmark US stock indices were comfortably moving into new record territory following yesterday’s dramatic, late-day rebound. Though off its intraday high, the Nasdaq Composite was leading the bullish advance with a 0.37 percent climb to 2,602.27. The Dow was trading only 0.09 percent higher at 13,644.95 while the S&P 500 rose 0.07 percent to 1,531.36 by the same time. Scanning the headlines, the outlying market movers once again had their roots in deals. Investors reacted this morning when Wachovia announced it would pay $6.8 billion in stock and cash to buy A.G. Edwards to create the second largest retail broker in the US. Shares of A.G. surged $10.47 to $87.62 on the announcement. In a more symbiotic deal, Apple reported that its TV will stream video from Google’s recently acquired Youtube file share site. Shares of Apple rose 1.0 percent to $120.01 on the news.

Despite the dim read on economic expansion from this morning’s GDP revision, Treasury traders were still banking on Fed neutrality with just a hint of a possible rate hike later down the road. The benchmark ten-year note was trading 8/32nds off the open at 96-28 as its yield jumped 3 basis points to 4.900 by 15:45 GMT. The longer-dated bond followed suit as it lost 12/32nds to 95-23 while its yield also added 3 basis points to 5.028.

John Kicklighter is a Currency Strategist at FXCM.