Dollar holds firm against seemingly poor GDP
30/May/2014 • Currency Updates•
London closed with sterling ticking up against the dollar although it lost some ground against the euro. A fair day for the FTSE, with trading following the weekly trend upwards. With most of Europe closed for Ascension Day, volumes were slimmer than usual and across the board sterling mainly bounced around resistance levels.
The latest consumer confidence figures were a real pleaser; the GFK survey showed that British consumers have been buoyed by the most dramatic improvement in economic confidence for 37 years. The index has climbed to zero, meaning equal numbers of people are positive about their financial situation opposed to those who are negative, this flipping the previous 9 years in a row of negativity.
No data out of the UK today.
The euro started well against the pound yesterday, but saw decline over the afternoon and Asian sessions are to start this morning on the defensive. It is still however trading half a cent above the week’s open.
A light day of trading in volume yesterday with half of Europe on holiday. German GDP ticked in slightly under YoY for Q1, at 0.5%. It will be a concern to Draghi and Merkel that even Europe’s economic powerhouse cannot achieve 1% growth.
Investors are nervous ahead of next week’s interest rate decision, with uncertainty contributing to the low volatility. Needless to say, next Thursday is the iceberg on the euro’s horizon.
Today gives Italian inflation and Greek retail sales.
The greenback held fairly steady yesterday despite some initially poor GDP figures, managing to hold on to gains made earlier in the week. The dollar looks set to be the star performer of the week, currently trading around a cent up from Monday’s open.
Although headline figures showed a contraction in US GDP of 1% last quarter, against the 0.5% called, investors knew to delve deeper into the statistical depths to determine the longer term picture. It turned out entropy drawdowns accounted for 1.6% of the contraction, so the underlying US economy actually grew by 0.6% last year.
More good news from the US due to their consistent unemployment figures, which show that initial and continuing jobless claims both came through to the downside. The key data for employment will naturally be next week’s NFP.
Personal consumption and consumer sentiment comes in today before speeches from a number of fed members.