As the European trading session was coming to a close, the forex market reacted to a string of data releases. The dollar was helped by a positive revision of the first-quarter US GDP, though the gains didn’t last long. Upbeat data out of the eurozone helped the euro maintain its positive trend.
The US economy grew at a better pace than initially estimated in the first quarter on the higher consumer spending and a jump in exports. The first quarter GDP growth, quarter-on-quarter, was revised to 1.4% (against the preliminary number of 1.2%). The positive revision lifted the greenback against the yen, though shortly after, the dollar was under pressure, losing all its earlier gains. At 112.58, the pair is still trading at a one-month high.
The upbeat GDP revision offered little support to the dollar index that stayed at a nine-month low around 95.80.
The eurozone business and consumer sentiment is the strongest in a decade based on the European Commission survey that was released today. The economic sentiment index rose to 111.1 in June from 109.2 in May, and above expectations of 109.5. The barometer for Germany, France and the Netherlands rose strongly. The Gfk German Consumer Climate also signaled strong consumer confidence in Germany, as the index rose to 10.6 for July (above the expected and prior month’s level of 10.4) and the highest level since 2001. Additionally, preliminary German HICP for June showed rising inflation, up 0.2% year-on-year, above the prior month’s 0.2% decline.
The strong HICP data supported the euro against the dollar during the European trading session. However, euro/dollar was under some pressure later in the session on the positive data out of the US. The pair was last trading at 1.1412.
In the absence of data releases, the pound continued building on the earlier gains against the dollar, following the more hawkish tone by the BoE Governor the previous day. Pound/dollar was last trading at 1.2987.
Oil prices continued building on the earlier positive momentum, rising to a two-week high. US government data showed on Wednesday that domestic crude production dropped by 100,000 barrels per day to 9.3 million last week. WTI was last trading at $45.30 a barrel as the European markets were coming to a close. However, there are concerns that this reduction is temporary on Tropical Storm Cindy in the Gulf of Mexico and maintenance in Alaska, implying that the price may be pressured as output rises again.
Negatively correlated to the greenback, gold has been pressured in late European session as the dollar rose against the yen, but the yellow metal managed to regain some its lost momentum. The commodity was last trading at $1,244.46 an ounce.
