FX Highlights

  • USD is trading lower Thursday with European currencies supported by report of the surprise rise in German and French Q2 GDP and a surge in global equity markets as the FOMC paints a relatively upbeat assessment of US economic outlook, commodity currencies rally along with equities and improving risk sentiment as energy and metal prices surge supported by the FOMC statement and today's positive data from the EU, not all the news from Europe was positive as Swiss producer and import prices fell the most in 34 years
  • Focus turns to today's release of US jobless claims and retail sales, the trade will be looking to see if today's US reports continue to fuel optimism about economic recovery and support equity markets and risk sentiment
  • EU Q2 GDP fell by less than expected 0.1% and 4.6% year on year, the trade had expected a quarterly decline of 0.5% and an annual decline of 5.1%, German and French Q2 GDP rise 0.3% signaling the recession in Europe has ended and economic growth is returning to the EU, EUR higher
    • Swiss producer and import prices fall the most since 1975 declining 6.1% on an annualized basis, CHF flat
  • The WSJ reports that the opposition DJP party in Japan is willing to tolerate a stronger JPY, Japanese national elections are set to be held on August 30th and the opposition DPJ party is extending its lead in the polls, JPY mixed
  • The FOMC elected to hold interest rates unchanged at 0.00-0.25% and will extend the purchase of long-term U.S. Treasury debt to the end of October to promote smooth transition, FOMC also said it will end debt buying with the slowdown of Treasury purchases to begin August 19th, according to the FOMC economic activity is seen leveling out and financial conditions improving further
  • Australia's AWOTE rises 1.2%, copper prices surge in China, AUD higher
  • US Federal deficit higher in July at 180.7 bln and 1.27 trln deficit for the fiscal year
  • US mortgage foreclosures rise 7% last month, Kansas City Fed says US jobless rate may stay elevated
  • US equity markets set to open sharply higher, European equities 1.5% higher, Nikkei closed 82 points higher

Upcoming Events

  • US-Thursday, jobless claims for week ending 08/08 will be released expected at 535k compared to 550k last month along with July retail sales expected at 0.7% compared to 0.6% last month and June business inventories expected at -0.9% compared to -1% last month
  • CAN- Thursday, no major economic reports are scheduled for release