The US dollar was bearish against most of its major pairs on Thursday with the exception of the JPY. On the US economic data increase, US GDP increased to -31.7% compared to the quarter in the 2nd quarter 2nd reading (-32.5% expected) from -32.9% in the 2nd quarter advanced reading. Initial unemployment benefits fell to 1,006K in the week ending August 22 (1,000K expected), from a revised 1,104K in the previous week. Continuous claims dropped to 14,535K for the week ending August 15 (14,400K expected), from a revised 14,758K a week earlier. Pending home sales increased 5.9% in the month of July (+ 2.0% expected) compared to + 15.8% in June. Fed Chairman J. Powell spoke at the Jackson Hole Economic Policy Symposium, outlining the Fed’s recently revised consensus statement. First, the Fed removed its maximum employment target and instead aimed at maximum employment as a broad-based target. Second, the Fed is trying to achieve inflation that averages 2% rather than a 2% target. Although the changes are subtle, it shows the serious impact of coronavirus on a US economy that was already slower before the pandemic.
On Friday, personal income for July is expected to fall 0.4% a month compared to -1.1% in June. Wholesale stocks for the preliminary treatment in July are expected to fall 0.9% per month compared to -1.4% in the final treatment in June. Personal consumption for July is expected to increase 1.5% per month compared to + 5.6% in June. Market News International’s Chicago Purchasing Managers’ Index for August is expected to move to 52.6 per month from 51.9 in July. Finally, the University of Michigan’s Consumer Sentiment Index for the final reading in August is expected to remain at 72.8 per month, in line with the preliminary reading in August.
The euro was bearish against most of its major pairs with the exception of the JPY. In Europe, the European Central Bank reported +3.2% growth in M3 Money Supply in July (up from + 9.2% in the expected year). France’s INSEE has published August business confidence indicators of 91 (against expected 88) and production confidence of 93 (against 86 expected).
The Australian dollar was bullish against all the major pairs.
The U.S. 10-year yield jumped 5.4 bps to 0.742%.
Gold fell $ 25.83 (-1.32%) to $ 1928.63.
WTI crude fell $ 0.40 (-0.92%) to $ 42.99.
An unstable start to the US Forex trading session ahead of Fed Chairman J. Powell’s speech at the Economic Policy Symposium ended in a relatively flat session when the closing bell rang. The biggest FX pair trainer was the USD / JPY, which gained 58 pips to 106.57. The pair may not appear to be breaking away from its short-term consolidation in a bearish trend channel. A break above 107.15 requires a test of the channel resistance line, while a break below 105.10 support requires a continuation lower to test low August at 104.20.
