Dollar Looks To Survive Payroll Test

Daily Forex Fundamentals | Written by Investica | Aug 01 08 10:30 GMT |

The dollar should prove resilient on Friday unless there is a decline in employment much beyond the 100,000 level The dollar was unable to make a fresh attack on the 1.5550 level on Thursday and weakened sharply following weaker than expected US data releases. Second-quarter GDP growth was provisionally estimated at an annualised 1.9% from 0.9% the previous quarter which was below expectations while the fourth quarter of 2007 was revised to show a contraction. Business investment and the housing sectors were weak while exports provided important support. There was a sharp decline in business inventories, but this should lessen pressure for a further substantial drawdown in stocks this quarter. Elsewhere, jobless claims rose sharply to a 5-year high of 448,000 in the latest week from 404,000 while continuing claims rose sharply. Although the data may have been distorted by technical changes, there will be reduced confidence over the Friday employment report. Following the weaker than expected data, the dollar dipped to lows of 1.57 against the Euro. In contrast, the Chicago PMI index rose to 50.8 for July from 49.6 the previous month, the first reading above 50.0 for six months as orders strengthened which eased fears over the national survey. The dollar recovered to 1.5560 on Friday ahead of the key monthly payroll release Investica http://www.investica.co.uk Disclaimer: Investica's market analysis is not investment advice and must not be taken as recommending particular market positions. Investica can take no responsibility for any actions taken by investors.