U.S. economy rebounded sharply in the second quarter

Good Morning,

- The U.S. dollar index held below a 10-month high early on Thursday.

- Asian shares: Japan's Nikkei -0.16%, Hong Kong's Hang Seng 0.17% (07:05 GMT), Korea's Kospi -0.31%, Australia's ASX 200 0.14% and China's Shanghai 0.93%.

- Mediator says Argentina didn't reach an agreement with holdouts.

- Argentina downgraded to Selective Default (SD) from CCC, by S&P.

- The dollar index last traded at 81.422 after rising as far as 81.545 - a high last seen in mid-September 2013. Still, the index is up more than 2 percent so far this month, on track for its biggest monthly gain in over a year.

- German retail turnover in June 2014 in Germany increased 0.4% in real terms and 0.6% in nominal terms compared with the corresponding month of the previous year.

- U.S. economy rebounded sharply in the second quarter, with gross domestic product (GDP) motoring at a 4.0 percent annualized pace. That outcome was well above the 3.0 percent consensus .

- The Fed in yesterday’s meeting gave no fresh signs it was in a hurry to raise interest rate. It delivered a slightly more upbeat assessment on the economy and scaled back its monthly bond-buying program by another $10 billion as expected.

- The Federal Reserve said slack in the labor market persists even as the economy is picking up, and it continued to trim monthly asset purchases that have pumped up its balance sheet to a record $4.41 trillion. “A range of labor-market indicators suggests that there remains significant underutilization of labor resources,The likelihood of inflation running persistently below 2 percent has diminished somewhat.”

- The two-year Treasury yield jumped to its highest in over three years at 0.59 percent, which helped boost the U.S. dollar.

- Also data from yesterday showed annual inflation in Germany slowed to 0.8 percent in July, not helping the Euro.

- BofA on FED’s meeting: Dovish surprise but still bullish USD. "Relative to some expectations for a hawkish tilt, the Fed’s focus on the underutilization of labor resources was interpreted dovish by the FX market. The dollar had risen strongly following the better-than-expected GDP print earlier in the day, and over the past week with some anticipating a shift in the Fed’s tone. Lacking any such shift in the statement, the event was used as an opportunity to pare positions," BofA notes. "We continue to expect the USD strength in H2 2014 as growth improves supporting USD demand. However, further gains in employment and wage data are likely needed to extend the dollar’s recent rally from here, given the Fed’s data dependence and continued dovish tone," BofA projects.

- UK house prices recorded their fifteenth successive monthly increase in July, the pace of growth slowed. The price of a typical home increased by just 0.1% over the month, while the annual rate of price growth moderated to 10.6% from 11.8% in June. “ The slowdown was not entirely unexpected, given mounting evidence of a moderation in activity in recent months. Mortgage approvals declined by almost 20% between January and May , and there has also been some softening in forward looking indicators, such as new buyer enquiries. “

- Commerzbank on AUD/USD: The pair is under pressure in its range, the intraday Elliott counts are neutral to negative and we suspect that we are now less likely to see a recovery to the 0.9505 July high and 0.9523 Fibonacci retracement. Staying below 0.9330 will trigger losses to the 0.9203/.9194 May low and 200 day ma. We also find the 55 week ma in this vicinity at 0.9188 and the 32.8% retracement at 0.9195. These represent major break down points short term.

- Watch today: Eurozone data for consumer inflation and unemployment, US jobless claims

Have a nice Day!