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FxPro Forex Analysis: Eurozone inflation data unlikely to halt EURUSD trend

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.

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FxPro Forex Analysis: US GDP for Q2 erases Q1 decline

GDP for the US in Q2 jumped as high as 4%, far more than the expected 3% and has totally wiped out the surprise decline in Q1 which was originally reported to be -2.9% but has been revised up to -2.1%. This compliments the good consumer confidence data yesterday and has led to further strength for the US dollar. USDJPY was testing a month high around 102.20 level and has now smashed through that meanwhile EURUSD, GBPUSD and AUDUSD are all seeing a move to the downside. The daily chart for EURUSD in particular is not looking great, but some of the indicators are pointing to it being oversold, as is the case with the RSI, well below 30.0, but this has been the case for over a week now.

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FxPro Forex Analysis: Can US GDP recoup losses from Q1?

Dollar bulls were given yet another boost yesterday as the US revealed better than expected consumer confidence data and the dollar index hit a fresh five and a half month high during the session. Without wanting to sound like a broken record, it will still be the currency to focus on today as we get a raft of economic data from across the pond with the major ones being ADP private payrolls, GDP and later the FOMC rate decision. Labour market data is key and will continue to be so, even the weekly jobless claims that last week dipped below the 300k level, are a focus for traders as this has also been a driver behind the recent dollar strength. This means today’s ADP figure, due to come in at 230k, will be closely watched, but out of the three it’s the GDP data that is likely to move the markets most. This is because tonight’s FOMC does not include a press conference and so there’s unlikely to be any changes to what we saw or heard last month. GDP is due to bounce from the shock -2.9% decline in the first quarter, with the increase expected to register a rise of 3.0%. This is seen as an important milestone for the US economy which suffered a severe retraction as a result of the incredibly harsh winter where the consumer was hit hard. As mentioned yesterday’s data showed the consumer element at least is back on track with confidence hitting its highest level since October 2007, but it’s not just about consumers and the business investment element will be closely watched to see if companies are ramping up investment ahead of making hay in the second half of the year.

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FxPro Forex Analysis: US consumer defies geopolitical tension

There were concerns that the consumer confidence figure release today was going to be knocked by the recent build up of geopolitical tensions in Ukraine and the Middle East, but this certainly wasn't the case. Stock markets and risk assets continue to defy gravity and it looks like the US economy will have rebounded from its shock fall in GDP last month strongly - we will see tomorrow. With the labour market continuing to improve it's little surprise to see a cheerier US consumer and the dollar remains well supported receiving a further boost today.

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FxPro Forex Analysis: Sterling and euro continue to battle dollar strength

A lack of major economic releases yesterday meant for a slow day of trading but overnight the Yen has seen a little action as USDJPY hits a three week high just pushing up against the 102.00 level. A surprise rise in unemployment to 3.7% and weaker retails sales in Japan gave traders an excuse to sell the Yen as they perceive the chances of further QE having increased, despite words form BOJ board member Koji Ishida giving away little in a speech overnight. Things should warm up a little from today onwards as we have a speech from the UK’s MPC member Ben Broadbent this morning, now the deputy governor for monetary policy and seen as one of the more hawkish voting members and then consumer confidence data from the US later this afternoon. This is likely to be a market mover as it’s one of the key metrics the Federal Reserve watch since the US economy is so heavily reliant on the consumer. The emphasis remains on the dollar and whether it can add to the gains it has made so far this month hovering around six week highs. Against sterling and the euro, the dollar has made good ground in recent weeks with cable remaining below the 1.7000 level and EURUSD seemingly anchored to just above 1.3400. Despite diverging central banks, in respect of the BOE and Federal Reserve, some of the UK data has softened leading to a protracted bout of profit taking in GBPUSD, which is susceptible to seeing further downside especially if this afternoon’s US consumer confidence, which is expected to rise from 85.2 to 85.3, comes in higher.

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FxPro Forex Analysis: July is month of the dollar

As we enter the last few days of July we can safely say that it’s been the dollar recovery that’s been one of the outliers of the month. The dollar index is up almost 2%, past June’s highs and closing in on the 2014 high and it’s the euro that’s felt the brunt of this dollar buying. Looking at a daily chart of the euro the technical picture doesn’t look all that promising as the uptrend that commenced exactly two year ago looks to be breaking down. Having said that some indicators are signalling EURUSD is oversold so it could be prone to a squeeze back upwards as the short trade for EURUSD is quite a crowded one now. Near term the key levels of resistance are seen at 1.3455 and 1.3485 with support seen at 1.3400. The week starts quietly in respect of economic data but builds into a crescendo in particular from the US as we see GDP data and the FOMC rate decision on Wednesday, then nonfarm payrolls on Friday. For today at least we do see PMI services data from the US as well as pending home sales at 14.45 and 15.00 respectively London time. The PMI figures is due to show a decline from 61.0 to 59.8 and anything lower than this might see the EURUSD bear squeeze as mentioned above but the focus will be on the other key economic events of the week.

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FxPro Forex Analysis: UK GDP in line

Sterling holding relatively steady after latest GDP data recorded 0.8% increase, in line with expectations. Cable 1.6990 after some initial weakness.

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FxPro Forex Analysis: EUR lower on weak IFO reading

The euro has reversed the initial early strength after weaker than expected Ifo data, which showed the headline reading fall to 108.0, from 109.7. Both expectations and current conditions balances fell. EURUSD is currently down to 1.3450.

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FxPro Forex Analysis: Eyes on sterling

The break back below the 1.70 level on cable yesterday reflected the extent of the dollar recovery seen during July, but also the more balanced view being taken towards the possibility of higher UK rates this year. Weaker than expected retail sales also put downward pressure on the UK currency early on during yesterday’s session. The focus this morning will be GDP data in the UK, seen rising 0.8%in the first reading of Q2 data at 08:30 GMT. Firmer numbers could give sterling the required lift back above the 1.70 level, but this could struggle to be sustained in the face of a continually firmer dollar. Also in focus early on will be the IFO data at 08:00 GMT. The headline index has fallen over the past couple of months and is expected to do so once again, from109.7 to 109.4. In the wider picture, there are still concerns regarding the potential impact of sanctions on Russia from Europe which have yet to be played out. As we mentioned yesterday, sterling could prove to be the more vulnerable currency should broader sanctions be implemented. Otherwise, the concern will be with energy and the impact of higher prices. The dominance of the dollar over the past week could leave some risk of profit taking into the weekend, the kiwi and the Swissie having the greater upside potential in this scenario.