In response to yesterday’s Outlook question, the answer is yes and in some style. The US not only recouped its growth losses for Q1 by showing Q2 growth was 4%, but the decline in Q1 was revised upwards. Unsurprisingly, the dollar surged on the news sending all the major pairs lower and USDJPY spiked getting over 103.00 briefly.
Overnight UK consumer confidence fell for the first time in six months which is keeping the lid on any GBPUSD bounce. The dollar softened a little following the FOMC rate decision which saw a further $10 billion reduction in asset purchases but this didn’t last long as the first hawkish dissenter argued against saying “that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends”. It looks like dollar weakness will be hard to come by in the coming weeks, certainly for the remainder of this one as we see tomorrow’s nonfarm payroll due to show 233k new jobs.
Ahead of tomorrow though, today is a little quieter, but we get Eurozone inflation this morning due to come in at 0.5%. EURUSD has found a little support around 1.3370 overnight but to keep that level in tact we would need to see a higher inflation print which is unlikely given the state the Eurozone economy still finds itself in. Scrutiny will also be given to the weekly jobless numbers as last week they dipped below the 300k mark dragging the 3 month average even lower. Today’s number is due to come in at 301k. Later there the Chicago PMI which can also prove to be a market mover, so anything above 63.0 should fuel the dollar bulls further.
Further reading:
Despite a bad month GBP still has the potential to come back
German unemployment -12K in July – better than expected
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