US GDP data misses forecast
The markets were expecting US economic growth of around 8.5% in quarter 2 but the actual number, released yesterday was just 6.5%. The US weekly jobless claims figure was also worse than expected. 400,000 American’s filed for unemployment benefits last week, well above the market expectations. These two sets of data proved the US economy isn’t out of the woods yet.
Cue US Dollar selling. The EURUSD rate got to within a whisker of $1.19 but hasn’t broken through yet. GBPUSD rose to $1.3950 and is trying to break above that this morning. As mentioned yesterday, $1.40 is the important divider between upward and downward trends in this pair and it hasn’t been above that $1.40 level since mid-June. I can’t help feeling the USD would be weaker were it not for rising covid concerns in Asia, prompting USD buying for its safe-haven allure.
As the Euro and Pound moved in tandem against the US Dollar yesterday, you can imagine that they were largely unmoved against each other. GBPEUR is still nestled below EUR 1.1750, with EUR1.1770 appearing to be the point at which GBP buyers run out of bravery. Improved economic sentiment in the EU; record high level helped the Euro to find support. Today is a big one for Eurozone data. Consumer inflation is forecast to have picked up to 2.0% or thereabouts and GDP growth is expected to have jumped to 13.2% on the year. As always, anything better or worse than these numbers will shift the dial for the Euro.
Sterling rising inexorably
Sterling continues to rise inexorably against the Australian Dollar. GBPAUD is just shy of AUD 1.89 this morning but looks set to test that level today.
The GBPNZD rate is just as well supported but NZD 2.00 is proving – and was always going to prove, a tough nut to crack.
In the background (as far as the Australasian currencies are concerned), the people’s Bank of China has slashed the level it pegs the Yuan against the US Dollar. That will have an impact on the earnings of countries that export to China.
Canadian and Eurozone GDP today
This afternoon brings Canadian GDP data. Another 0.3% monthly contraction is envisaged. If so, it’ll be the first two consecutive monthly declines since June 2020. That’s an anomaly when so many nations are posting growth as they emerge from the covid debacle. The GBPCAD rate peaked just below CAD 1.75 earlier in the week and starts today down at CAD 1.7360. If the GDP data is worse than expected, another push higher in this pair is very likely.
And on this day in 1909, French chemist Eugène Schueller founded L’Oréal. His first product was a range of hair dyes. I am sharing this with you because …you’re worth it.
And that, dear reader, was July. Have a great weekend. See you in August.