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US GDP Surges Higher taking Greenback for the ride

Fri, Aug 29 2008, 02:13 GMT
by Easy Forex Team

Easy Forex

US GDP Surges Higher taking Greenback for the ride

U.S. Dollar Trading (USD) traded near week lows as Oil surged above $120 a barrel on Hurricane Gustav fears, pre US data. US GDP Data took the markets by surprise with a staggering 3.3% Q2 y/y rate. Forecasts had called for a solid 2.7% up from 1.9% in Q1. Government stimulus and surging exports were the main causes for the unexpected bounce which resulted in strong US stocks and Dollar. Oil fell off highs but markets are wary of another rally as Gustav approaches. Weekly Jobless Claims dropped to 425K from 435K previously.  In the U.S. share markets, the NASDAQ was up 29 points (1.22%) and the Dow Jones was up 212 points (1.85%). Crude Oil closed up $-2.56 ending the New York session at $115.59 per barrel. Looking ahead, July Core PCE is forecast at 0.3% along with Consumption at 0.2%. Also released is the August Chicago PMI seen slightly lower at 50 from 50.8 previously and the August Michigan consumer confidence expected to rise slightly to 62.

The Euro (EUR) was able to test the topside twice as Euro data supported and Oil rallied. US GDP was able to subdue the Euro rally as Oil reveresed and Dollar rallied. German Unemployment dropped by 40K much more than the 10K expected. Overall the EUR/USD traded with a low of 1.4671 and a high of 1.4812 before closing the day at 1.4705 in the New York session.  Looking ahead, Eurozone August CPI is seen slightly lower at 3.9% from 4.0% in July.  Also released the July Unemployment rate forecast to remain at 7.3% and August Consumer Confidence is forecast at -20.

The Japanese Yen (JPY) traded in a volatile manner tracking USD strength ending relatively unchanged as Equities rallied and Oil fell from highs. GBP/JPY broke through the key 200 level at the height of Yen strength. Overall the USDJPY traded with a low of 108.78 and a high of 109.72 before closing the day around 109.50 in the New York session. UPDATE Japanese CPI for Tokyo was 1.5% in August along with Nationwide July CPI at 2.4%. July Retail Sales jumped to 1.9% from 0.3% in June and 1.3% expected. July Industrial Production also bounced to +0.9% from -2.2% previously. 

The Sterling (GBP) came under extreme pressure, falling against all currencies as data confirmed an economy on the verge of recession. Nationwide House Prices dropped for a 10th month running at -1.9% in August. More Concerning was the continued slump in CBI Distributive Trades Realized at -46 in August vs. -30 expected and -36 in July. Overall the GDP/USD traded with a low of 1.8240 and a high of 1.8404 before closing the day at 1.8290 in the New York session.

The Australian Dollar (AUD) tracked oil movements but traded with a bid tone after AUD data provided some relief. Q2 CAPEX rebounded strongly to 5.7% from -2.5% previously. Heavy falls in Oil during the US session capped gains and settled just above 86 cents. Overall the AUD/USD traded with a low of 0.8576 and a high of 0.8694 before closing the US session at 0.8620.

Gold (XAU) tracked Oil and the USD gaining strongly before US data sent the precious metal back to the opening levels. Oil was weighed down from IEA comments about strategic reserves being ready to use in case of emergencies. Overall trading with a low of USD$825.90 and high of USD$844 before ending the New York session at USD$832 an ounce.

TECHNICAL COMMENTARY
 
 

Euro – 1.4730
Initial support at 1.4672 (Aug 28 low) followed by 1.4634 (Aug 27 low). Initial resistance is now located at 1.4811 (Aug 28 high) at followed by 1.4908 (Aug 21 high).

Yen – 109.10
Initial support is located at 108.70 (Aug 27 low) followed by 108.3 (Aug 21 low). Initial resistance is now at 109.89 (Aug 27 high) followed by 110.29 (Aug 25 high).

Pound – 1.8310
Initial support at 1.8241 (Aug 28 low) followed by 1.8177 (July 17, 2006). Initial resistance is now at 1.8489 (Aug 27 high) followed by 1.8531 (Aug 26 high).

Australian Dollar – 0.8640
Initial support at 0.8577 (Aug 28 low) followed by 0.8532 (Aug 27 low). Initial resistance is now at 0.8694 (Aug 26 High) followed by 0.8814 (Aug 25 high).

Gold – 835
Initial support at 807.40 (Aug 22 low) followed by 801 (Aug 20 low). Initial resistance is now at 844.2 (Aug 28 high) followed by 846 (Former May 2 support)

Published on  Fri, Aug 29 2008, 02:38 GMT