Dollar strength continues after Q2 GDP beat expectations
Laurence Hayward " | July 26, 2019
US Q2 GDP beat forecasts, but fell from 3.1% to 2.1%. Trade talks and the FOMC meeting are both on the horizon for next week. The ECB signaled a rate cut and announced the resurrection of a bond buying program. With the ECB meeting complete, the markets are focusing on the new UK Prime Minister, Boris Johnson, the cabinet he is assembling, and Brexit.
July 26, 2019
EUR/USD 1.1130 GBP/USD 1.2408 USD/CAD 1.3188 AUD/USD 0.6916 USD/JPY 108.66 USD/CNH 6.8800 USD/ILS 3.5167 USD/MXN 19.0312 USD/CHF 0.9935 USD/INR 68.9050
The dollar’s strengthening continues as data beat forecasts. Q2 GDP fell to 2.1% from 3.1%, beating the forecast of 1.8%. The lower number was likely impacted by trade tensions with China. Trade talks with China are set to resume on July 30 in Shanghai. Yesterday’s strong Durable Goods numbers lessened the pressure on the Fed to lower interest rates next week.GBP
Boris Johnson faced his first question time in Parliament as Prime Minister and said he plans for the UK to leave the EU by October 31. Jean-Claude Junker repeated that the deal the UK has is the best they are going to get. The pound fell yesterday and the decline continued this morning to test the 1.2400 supportEUR
The ECB signaled they are ready to cut interest rates for the first time since 2016 and restart a bond-buying program. The euro had a volatile day due to the news but ended close to where it opened. Retail Sales, which rose 0.5% MoM in June from -0.3 in May, fell 1.1% and fell to -0.8% YoY. Consumer Confidence rose to 102 from 101.CAD
The Canadian dollar is weakening again as oil is tracking sideways. There is no new data out today. The loonie lost a cent and a half against the USD this week.ASIA/PACIFIC
The Shanghai Composite tracked higher and the Japanese Indexes declined. Australian and New Zealand dollars both strengthened and equities rose.