Mid-Day Report: Dollar Mildly Higher as Q2 GDP Revised Up

Dollar strengthened against European majors earlier today and is gathering some more steam after better than expected economic data. Q2 GDP growth in US was revised up to 4.2%, from initial estimate of 4.0%, and beat expectation of downward revision to 3.9%. GDP price index was also revised up to 2.1% versus expectation of 2.0%. Initial jobless claims was relatively unchanged at 298k in the week ended August 23. While the greenback is mildly higher against European majors, it’s stuck in this week’s tight range and the greenback is also soft against yen and commodity currencies. Also, weakness in European stock index could drag SP 500 back below 2000 handle today.

Economic data released from Eurozone were generally disappointing. Confidence indicators all deteriorated and were mostly below expectations in August, expect business climate indicator. EU Economic Affairs Commissioner Jyrki Katainen said that the data “is a source of concern”. Eurozone M3 money supply rose 1.8% yoy in July versus expectation of 1.5% yoy. German unemployment rose 2k in August versus expectation of -6k. German unemployment was unchanged at 6.7%. German CPI rose 0.0% mom, 0.8% yoy in August as expected. UK CBI reported sales improved to 37 in August.

Australian dollar was lifted by investment data released today. Private capital expenditure rose 1.1% in Q2 versus expectation of -0.8% fall. Some analysts noted that the data showed that adjustment in non-mining sectors could be slower than originally expected. But overall, there is no change in the general consensus that RBA will keep rates unchanged for the rest of the year.

Daily Pivots: (S1) 0.9128; (P) 0.9156; (R1) 0.9175; More….

USD/CHF drew some support from 4 hours 55 EMA and recovers but stays in tight range below 0.9184 temporary top. Intraday bias remains neutral first for some more consolidations. We’d expect downside of pull back to be contained above 0.9022 support and bring resumption. Break of 0.9184 should target 161.8% projection of 0.8702 to 0.9036 from 0.8855 at 0.9395 next.

In the bigger picture, price actions from 0.9971 are viewed as a correction pattern. The sustained trading above 55 week EMA argues that it might be finished at 0.8698 already. Focus remains on whether USD/CHF can sustain above 0.9156 resistance. Decisive break there should confirm this case and turn outlook bullish for a test on 0.9971 high. Meanwhile, break of 0.8855 near term support will dampen this bullish view and would extend the correction to 50% retracement of 0.7065 to 0.9971 at 0.8518 and below. In that case, we’ll start to look for reversal signal below 0.8518 again.

USD/CHF 4 Hours Chart

USD/CHF Daily Chart

GMT
Ccy
Events
Actual
Consensus
Previous
Revised
01:30
AUD
Private Capital Expenditure Q2
1.10%
-0.80%
-4.20%

07:55
EUR
German Unemployment Change Aug
2K
-6K
-12K
12K
08:00
EUR
Eurozone M3 Y/Y Jul
1.80%
1.50%
1.50%

09:00
EUR
Eurozone Economic Confidence Aug
100.6
101.5
102.2

09:00
EUR
Eurozone Industrial Confidence Aug
-5.3
-4.5
-3.8

09:00
EUR
Eurozone Consumer Confidence Aug F
-10
-10
-8.4

09:00
EUR
Eurozone Services Confidence Aug
3.1
3.5
3.6

09:00
EUR
Eurozone Business Climate Indicator Aug
0.16
0.1
0.17

10:00
GBP
CBI Reported Sales Aug
37
25
21

12:00
EUR
German CPI M/M Aug P
0.00%
0.00%
0.30%

12:00
EUR
German CPI Y/Y Aug P
0.80%
0.80%
0.80%

12:30
USD
GDP (Annualized) Q2 S
4.20%
3.90%
4.00%

12:30
USD
GDP Price Index Q2 S
2.10%
2.00%
2.00%

12:30
USD
Initial Jobless Claims (AUG 23)
298K
299K
298K
299K
14:00
USD
Pending Home Sales M/M Jul

0.60%
-1.10%

14:30
USD
Natural Gas Storage

79B
88B

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