The US dollar suffered huge losses to most of its major counterparts in recent forex trading, as the GDP reading was downgraded to show a 2.9% contraction. Recall that the GDP has already been downgraded from an initial positive reading to a 1.0% contraction in the latest revision.
Apparently, exports had to be revised much lower and personal spending significantly downgraded because of a massive decline in healthcare spending. However, some traders brushed this report aside since it’s backward looking and doesn’t accurately reflect improvements in other sectors of the economy. Initial jobless claims, core PCE price index, and personal spending and income data are due today. Stronger than expected figures could allow the dollar to recover.
The euro advanced to the dollar in recent forex trading but retreated against its other forex counterparts, despite the improvement in German GfK consumer climate data. The figure climbed from 8.6 to 8.9 instead of holding steady at 8.6. For today, there are no major reports lined up from the euro zone but the EU Economic Summit is going on and it would be interesting to see the updates on this event and how it could impact ECB policy and euro action.
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The pound continued to correct from its recent forex trading price rallies, as it pulled back to support levels against its forex counterparts. CBI realized sales was weaker than expected as the index fell from 16 to 4 instead of improving to 25. BOE Governor Carney is set to testify again today and his remarks could carry a lot of weight in determining pound price action if he sets the record straight on what the BOE rate hike bias for the year will be.
The franc managed to score some gains against its forex counterparts as the UBS consumption indicator climbed from 1.68 to 1.77, indicating a pickup in spending. For today, there are no reports lined up from Switzerland so franc pairs might be in for consolidation.
The yen advanced to the dollar and most of its forex trading rivals as risk appetite slowed down in recent trading. There have been no reports released from Japan then and none are due today, suggesting that risk sentiment might continue to be the main driver of price action.
Comdolls recovered from their recent selloff, with NZD/USD climbing higher to the .8775 area and AUD/USD pulling back to broken support levels. There have been no reports released from the comdoll economies yesterday, which suggests that the move has been mostly a result of dollar weakness. There are still no reports due from the comdolls today, with the New Zealand trade balance due in the next Asian trading session.
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