Mid-Day Report: Dollar Got No Boost From GDP Revision

Market Overview | Written by ActionForex.com | Aug 28 08 13:25 GMT |

Dollar shows little reaction to stronger than expected upward revision in US Q2 GDP. Instead, volatility is again seen in the Japanese yen. Preliminary Q2 GDP annualized growth rate was revised higher from 1.9% to 3.3% versus expectation of 2.7%. Record exports and the smallest trade deficit in eight years were the biggest driver in the upward revision. Personal consumption was revised up to 1.7% versus expectation of 1.6%. Jobless claims dropped slightly but remains elevated at 425k. Dollar remains pressured by strength in oil which extends rebound to close to 120 level. The Japanese yen spikes lower in on anticipation of higher open in US stock markets. However, note that outlook in the yen is still mixed with USD/JPY and EUR/JPY bounded in range. Euro remains supported by strong employment report in Germany which saw unemployment rate dropped to record low of 7.6% in Aug, with unemployment dropping more than expected by -40k. Eurozone M3 money supply slowed less than expected to 9.3% yoy in Jul. Sterling, on the other hand, remains pressured after poor data from UK today. Nationwide house price dropped -1.9% mom, -10.5% yoy in Aug. CBI distributive trades dropped to -46 in Aug. Technically speaking, EUR/USD and AUD/USD continues to press near term resistance. Both pairs have displayed clear indication of loss of downside momentum and is set to confirm that short term bottom is in place. EUR/USD Mid-Day Outlook Daily Pivots: (S1) 1.4648; (P) 1.4712; (R1) 1.4791; More EUR/USD continues to press 1.4807 resistance in early US session. Intraday outlook remains neutral for the moment. As discussed before, with bullish convergence condition in 4 hours MACD and RSI, firm break of 1.4807 will be an important signal that a short term bottom is finally in place. Further break of 1.4908 will confirm and bring stronger rebound to test 1.5284 double top neckline resistance before staging another fall. On the downside, though, below 1.4571 will indicate that recent fall is still in progress to key medium term support at 1.4309. In the bigger picture, the double top reversal pattern (1.6019, 1.6038) serves as an important signal of completion of medium term rise from 1.1639 (05 low), which is supported by the decisive break of 55 weeks EMA While it's still early to conclude, recent development continues to build up the case of a medium term reversal. Focus will now be on a) whether key support level of 1.4309, (38.2% retracement of 1.1639 (05 low) to 1.6038 at 1.4358, 61.8% retracement of 1.3262 to 1.6038 at 1.4322) will hold; b) whether next trend line support (1.1825, 1.2483, now at 1.4359) will hold; c) whether weekly MACD will turn negative and d) whether monthly MACD will cross below signal line.

Economic Indicators Update

GMT	Ccy	Events	Actual	Consensus	Previous	Revised
06:00	GBP	U.K. Nationwide hse price Y/Y Aug	-10.50%	-9.50%	-8.10%
06:00	GBP	U.K. Nationwide hse price M/M Aug	-1.90%	-1.50%	-1.70%	-1.50%
08:00	EUR	Germany Unemployment change Aug	-40K	-10K	-20K
08:00	EUR	Germany Unemployment rate Aug	7.60%	7.80%	7.80%
08:00	EUR	Eurozone M3 Y/Y Jul	9.30%	9.00%	9.50%
08:00	EUR	Eurozone M3 3M Jul	9.60%	9.50%	9.90%
10:00	GBP	U.K. CBI Distributive Trades Aug	-46	-30	-36
12:30	USD	U.S. PCE core Q/Q Q2	2.10%	2.10%	2.10%
12:30	USD	U.S. PCE index Q/QQ2	1.20%	1.10%	1.50%
12:30	USD	U.S. GDP deflator Q2	1.30%	1.10%	1.10%
12:30	USD	U.S. GDP Q2	3.30%	2.70%	1.90%
12:30	USD	U.S. Jobless claims	425K	428K	432K	435K
12:30	CAD	Canada Current account Q2	6.8B	8.00B	5.56B