Mid-Day Report: Dollar Mixed after Jobless Claims, Euro Steady Despite Weak GDP

Dollar is mixed in early US session without a clear direction. The greenback weakened against commodity currencies today as stock markets rebounded. But it’s staying in tight range against Euro and Swiss Franc. On the other hand, sterling extended this week’s sharp fall and weakened broadly. Economic data from US has little impact on the markets. Initial jobless claims rose slightly more than expected by 21k to 311k in the week ended August 9, hitting the highest level in six weeks. Continuing claims rose 25k to 2.54m in the week ended August 2. Also released in early US session, US import price dropped -0.2% mom in July, Canada new housing price index rose 0.2% mom in June.

Released from Eurozone, German GDP contracted -0.2% qoq in Q2 versus expectation of -0.1% qoq. French GDP grew 0.0% qoq versus expectation of 0.1% qoq. Overall Eurozone GDP grew 0.0% versus expectation of 0.1% qoq. All were below expectations. Eurozone GDP was unrevised at 0.4% yoy in July. In the latest quarterly Survey of Professional Forecasters (SPF), ECB noted that respondents generally anticipated that expected inflation “to be on an upward sloping path over the next few years as a result of the recovery in real economic activity and an unwinding of the downward impact of previous oil, food and exchange rate developments”. Meanwhile, “stable inflation expectations and wage growth, although moderate, are considered to provide a floor to inflation”.

BoE MPC member Miles said that wages increased “pretty weakly” and that suggested there remained “a degree of spare capacity or slack in the labor market”. And thus, he noted the central bank could keep rates at the current record low of 0.50% for “a bit longer”. Nonetheless, he expected upward pressure in wages into 2015 and wage settlements would probably at around 2%. Regarding Eurozone, he’s said its “dead in the water” without any growth. In BoE’s quarter inflation report released yesterday, The central bank reduced its estimate of slack from a range of between 1% and 1.5% to just 1%. The central bank indicated that it preferred slack to be largely used up before tightening begins. The BoE forecast the first rate hike to take place in 1Q15 and the policy rate would reach 2% by 4Q16. Also released from UK,, RICS house price balance dropped to 49 in July.

Elsewhere, New Zealand business manufacturing index dropped to 53 in July, retail sales rose 1.2% qoq in Q2. Japan machine orders rose 8.8% mom in June. Swiss PPI dropped -0.8% yoy in July.

Daily Pivots: (S1) 0.9044; (P) 0.9071; (R1) 0.9101; More….

The consolidation from 0.9114 continues and intraday bias remains neutral. Deeper decline could be seen as the consolidation extends. Below 0.9032 will turn bias to the downside and extend the correction to near term channel support (now at 0.8983). Strong support would likely be seen there to bring another rally. Above 0.9114 will target 0.9156 key resistance next. However, sustained break of the channel support will indicate reversal and target 0.8855 and below.

In the bigger picture, price actions from 0.9971 are viewed as a correction pattern. The break above 55 week EMA argues that it might be finished at 0.8698 already. Focus is back on 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
22:30
NZD
Business NZ Manufacturing Index Jul
53

53.3
53.4
22:45
NZD
Retail Sales Ex Inflation Q/Q Q2
1.20%
1.00%
0.70%
0.80%
23:01
GBP
RICS House Price Balance Jul
49%
51%
53%
52%
23:50
JPY
Machine Orders M/M Jun
8.80%
15.50%
-19.50%

05:30
EUR
French GDP Q/Q Q2 P
0.00%
0.10%
0.00%

06:00
EUR
German GDP Q/Q Q2 P
-0.20%
-0.10%
0.80%

07:15
CHF
Producer Import Prices M/M Jul
0.00%
0.00%
0.00%

07:15
CHF
Producer Import Prices Y/Y Jul
-0.80%
-0.90%
-0.80%

08:00
EUR
ECB Monthly Bulletin

09:00
EUR
Eurozone CPI M/M Jul F
-0.70%
-0.60%
0.10%

09:00
EUR
Eurozone CPI Y/Y Jul F
0.40%
0.40%
0.50%

09:00
EUR
Eurozone CPI – Core Y/Y Jul F
0.80%
0.80%
0.80%

09:00
EUR
Eurozone GDP Q/Q Q2 A
0.00%
0.10%
0.20%

12:30
CAD
New Housing Price Index M/M Jun
0.20%
0.20%
0.10%

12:30
USD
Import Price Index M/M Jul
-0.20%
-0.40%
0.10%

12:30
USD
Initial Jobless Claims (AUG 9)
311K
307K
289K
290K
14:30
USD
Natural Gas Storage

81B
82B

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