US Dollar Rises ahead of Key Data
The US dollar climbed higher Wednesday, as the outlook on the world’s largest economy improved following Tuesday’s economic data releases. The heavy slate of data releases continues in the latter half of the week, as investors brace for revised GDP, pending home sales, personal income and consumer spending.
The US dollar index, a broad gauge of the greenback’s performance versus six major peers, advanced 0.24 percent to 80.54. The index has increased more than 0.6 percent since May 21.
The outlook on the US economy appreciated following the release of durable goods orders, services PMI and consumer confidence. The reports suggested the US economy was regaining momentum after the winter downturn.
The US government had no major data to report Wednesday.
The improved outlook on the economy will be put to the test Thursday when the markets react to revised first quarter GDP figures. The markets expect the revised reading to show the US economy contracted in the first quarter.
The Commerce Department initially reported annualized first quarter growth at 0.1 percent.
Federal Reserve Chair Janet Yellen told lawmakers earlier this month the unexpected slowdown in Q1 would not impact the recovery. Yellen fully expects the recovery to deepen as the year progresses, resulting in lower unemployment and a steady rise in inflation.
The EURUSD lost ground Wednesday, declining for the second consecutive day. The pair reached an intraday low of 1.3591. It consolidated at 1.3597, declining 0.28 percent. The pair could fall below the next key supports amid growing signs the European Central Bank will introduce new policy next week. ECB President Mario Draghi acknowledged on Monday that deflation poses a serious threat to the Eurozone.
The pair’s initial support is found at 1.3594. The next targets are 1.3561 and 1.3527.
German and French data disappointed the markets today. German unemployment rose for the first time in six months, while French consumer spending declined.
The GBPUSD fell below 1.67 in intraday trade for the first time since early April, threatening the pair’s six-month bullish trend. The GBPUSD consolidated at 1.6709, declining 0.6 percent. The pair faces resistance at 1.6847 and initial support at 1.6704.
The greenback’s broad strength also extended to the Canadian dollar, sending the USDCAD to 1.0875 on mixed commodity trading. The pair rebounded from an intraday low of 1.0842 to advance 0.14 percent. Initial support is located at 1.0823 and resistance at 1.0895.
The USDJPY backtracked after flirting with 102.00 on Tuesday. The pair slid 0.25 percent to 101.77. The trend line shows support now at 101.60 and resistance at 102.29.
The Japanese government on Thursday will report on national consumer prices, household spending, unemployment and industrial production.
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