Forex Trading Library

Forex Afternoon Wrap – 30/07

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US Q2 GDP estimated at 2.3%. Annualized PCE up 2.9%

Key Notes:

  • Japan prelim industrial production m/m 0.8% vs. 0.3%
  • Australia building approvals m/m -8.2% vs. -1.0%; y/y 8.6% vs. 19.5%
  • Australia export prices q/q -4.4% vs. -4%; import prices q/q 1.4% vs. 1.5%
  • Spain GDP q/q 1.0% vs. 1.0%; y/y 3.1% vs. 3.2%
  • German unemployment rate 6.4% vs. 6.4%
  • Italy GDP q/q 1.4% vs. 1.8%; y/y 6.5% vs. 3.7%
  • German CPI m/m 0.2% vs. 0.2%; y/y 0.2% vs. 0.3%
  • US GDP annualized q/q first estimate 2.3% vs. 2.5%
  • GDP price index q/q 2.0% vs. 1.5%
  • PCE annualized q/q 2.9% vs. 2.7%; Core PCE annualized 1.8% vs. 1.6%
  • Initial jobless claims 267k vs. 270k

The US FOMC statement released late yesterday evening showed that the Fed was preparing for a rate hike in September, if the labour market shows “some” improvement. While acknowledging that the US unemployment rate was solid, the Fed preferred to see further gains in the US labour market before hiking rates. While the markets were initially muted to the FOMC statement, the US Dollar started to gain ground as investors started to realize that the timing of the rate hike was near.

The Asian markets opened today with the Aussie continuing to decline after posting session highs above 0.7315. Economic data from Australia saw the building approvals decline by -8.2% while the Australian import/export prices remained soft. The Kiwi posted a second day of losses, as the currency fell from the opening session and was seen testing previous lows near 0.6583 at the time of writing. The Yen started to strengthen since yesterday as the currency was seen testing the highs of 124.5 briefly.

From Europe, Spain’s CPI for the year remained flat while the quarterly GDP was also soft at 1%, falling below estimates, but saw modest improvements from 0.9% previously. Other economic data included the German unemployment rate which remained steady at 6.4%. The Euro was weaker since yesterday as the single currency fell to the lows of 1.0925 into the US trading session.

The British Pound which briefly tested the highs of 1.5685 was weaker this morning as the currency fell to session lows near 1.5592 before stabilizing.

The US trading session saw the focus on the Q2 GDP estimates. While the number came in at 2.3%, below the consensus of 2.5% – 2.6%, the sharp improvement from the previous quarter was also supported by the annualized PCE which saw a bullish print of 2.9%. The US Dollar rallied across the board as the economic data indicates that the US economy is surely heading back on track. Other economic data also included the weekly jobless claims which rose 262k against estimates of 270k. The weekly jobless claims, since last week has remained strong and it is likely that the upcoming jobs report for July will see a rather strong print. The US Dollar index briefly tested the highs near 97.55 and remains well supported for further gains to continue in the near term.

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