US GDP data was weaker than expected which triggered some doubts over the outlook.
US GDP data was weaker than expected which triggered some doubts over the outlook. US bond yields were still marginally higher on the day.
Risk appetite held firm during Thursday on hopes for sustained central bank support, but conditions were more fragile again on Friday. After Wall Street equities posted gains, futures lost ground in Asia on Friday. Asian markets also moved lower with further regulatory concerns.
The dollar continued to lose ground with fresh 1-month lows before stabilising as equities moved lower. EUR/USD peaked near 1.1900 before a correction to 1.1875. Sterling held a firm tone, although GBP/USD hit resistance above 1.3950. The Swiss franc and Yen held a firm tone amid the more vulnerable risk conditions. Commodity currencies were underpinned by the weaker US dollar, but retreated from intra-
German unemployment declined 91,000 for July compared with consensus forecasts of a 28,000 fall which maintained near-term confidence in the short-term outlook. Euro-zone industrial sentiment strengthened to 14.6 from 12.8 previously and there was also a net gain in services sentiment. The overall business survey strengthened to 119.0 from 117.9 which helped underpin underlying Euro-zone confidence.
German consumer prices increased 0.9% in July with the year-on-year increase jumping to 3.8% from 2.3% and well above consensus forecasts of 3.3%. The Euro-zone CPI data will be released on Friday with the ECB expecting a near-term increase which will limit the impact.
EUR/USD held a firm tone into the New York open and edged higher to 1.1770 as the US dollar remained on the defensive following Wednesday’s Fed policy meeting.
US initial jobless claims declined to 400,000 in the latest week from a revised 424,000 figure the previous week, but again above consensus forecasts of 380,000. Continuing claims increased marginally to 3.27mn from 3.26mn previously with some reservations over trends.
The advance reading for second-quarter GDP came in at 6.5% from 6.3% the previous quarter, but well below market expectations of 8.5%. There was a very strong increase in consumer spending, but growth was held back by supply constraints. The data overall triggered further net reservations over the economic developments.
The dollar edged lower following the US data and posted fresh monthly lows with fresh reservations over a potential underlying slowdown in the economy.
Markets remained wary over the risk of month-end position adjustment and EUR/USD maintained a strong tone into the European close with highs just below 1.1900. The dollar secured a slight recovery on Friday amid a more defensive tone surrounding risk appetite with EUR/USD near 1.1880 ahead of US PCE prices data.
US Treasuries edged lower on Thursday with the 10-year yield edging higher while US equity futures posted net gains. The dollar was, however, vulnerable to wider selling pressure and retreated after the US data. The US currency was unable to recover ground into the European close and USD/JPY dipped to test 109.50 with no recovery into the Wall Street close even though underlying volatility subsided.
Japan announced that the state of emergency will be extended and there were also warnings that the overall infection rates had not peaked. Industrial production data was stronger than expected with a 6.2% annual increase and unemployment edged lower to 2.9% from 3.0%, although retail sales data was slightly below consensus forecasts. US equity futures moved lower in Asia and regional markets also declined with a more fragile tone surrounding risk appetite as Chinese markets lost ground.
USD/JPY was held just above 109.50 in early Europe with EUR/JPY holding just above the 130.0 level.
UK mortgage lending increased sharply to £17.9bn for June from £6.80bn the previous month as lending surged ahead of the increase in stamp-duty rates, but approvals declined to 81,300 for June from 87,000 the previous month while there was a limited net increase in consumer credit. The overall impact was limited, especially with distortions due to changes in tax rates, but underlying UK confidence held firm.
Sterling gained underlying support from solid risk conditions and gains in equity markets. Changes to travel regulations also helped underpin confidence. GBP/USD traded to highs at 1.3980, but the scope for further progress was limited by trends on the crosses with GBP/EUR attempting to push above the 1.1760 level.
There was caution ahead of next week’s Bank of England policy meeting and markets were also wary over month-end position adjustment. Sterling overall held a firm tone, but GBP/EUR continued to find resistance close to 1.1740 while GBP/USD settled around 1.3960.
Sterling edged lower on Friday amid the more vulnerable risk conditions and GBP/USD traded just below 1.3950.
|06:30||Consumer Spending MM(JUN)||1.40%||10.60%|
|06:30||GDP Detailed QQ||0.80%||-0.10%|
|08:00||CHF KOF Leading Indicator(JUL)||133.4|
|09:00||Germany GDP (Q/Q)||-1.50%||-1.80%|
|09:00||Germany GDP (Y/Y)||-3.40%|
|13:30||USD PCE Core Price Index (Y/Y)(JUN)||3.40%|
|13:30||USD PCE Core Price Index(M/M)(JUN)||0.50%|
|13:30||USD Personal Income (M/M)(JUN)||-2.00%|
|13:30||USD Personal Spending (M/M)(JUN)||0.00%|
|13:30||CAD GDP (M/M)(JUN)||-0.30%|
|13:30||CAD RMPI (M/M)(JUN)||3.20%|
|15:00||USD Michigan Consumer Sentiment(JUL 01)||80.8|