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Forex Today: US Dollar consolidates losses ahead of US data dump
Here is what you need to know on Thursday, August 15:
The US Dollar (USD) consolidates its weekly losses against its major rivals early Thursday. In the second half of the day, the US economic docket will feature weekly Initial Jobless Claims data, Retail Sales and Industrial Production figures for July. Manufacturing surveys from regional Federal Reserve (Fed) banks and comments from Fed policymakers will also be watched closely by market participants.
The USD failed to attract buyers on Wednesday after the data published by the US Bureau of Labor Statistics showed that the Consumer Price Index (CPI) and the core CPI both rose 0.2% on a monthly basis in July, as expected. The USD Index closed the fourth consecutive trading day in the red on Wednesday and the benchmark 10-year US Treasury bond yield declined toward 3.8%. Early Thursday, the USD Index holds steady at around 102.50 and the 10-year yield moves sideways slightly above 3.8%. Meanwhile, US stock index futures trade marginally higher after Wall Street's main indexes registered modest gains.
US Dollar PRICE This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.88% | -0.73% | 0.43% | -0.23% | -0.69% | -0.06% | 0.06% | |
| EUR | 0.88% | 0.18% | 1.30% | 0.66% | 0.08% | 0.83% | 0.97% | |
| GBP | 0.73% | -0.18% | 1.36% | 0.48% | -0.11% | 0.64% | 0.79% | |
| JPY | -0.43% | -1.30% | -1.36% | -0.63% | -1.18% | -0.48% | -0.38% | |
| CAD | 0.23% | -0.66% | -0.48% | 0.63% | -0.52% | 0.17% | 0.32% | |
| AUD | 0.69% | -0.08% | 0.11% | 1.18% | 0.52% | 0.75% | 0.89% | |
| NZD | 0.06% | -0.83% | -0.64% | 0.48% | -0.17% | -0.75% | 0.14% | |
| CHF | -0.06% | -0.97% | -0.79% | 0.38% | -0.32% | -0.89% | -0.14% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The UK's Office for National Statistics reported in the European morning that the UK's Gross Domestic Product (GDP) expanded at an annual rate of 0.9% in the second quarter. This reading followed the 0.3% growth recorded in the first quarter and came in line with the market expectation. Other data from the UK showed that Manufacturing Production and Industrial Production increased by 1.1% and 0.8%, respectively, on a monthly basis in June. GBP/USD edged higher following these data and was last seen trading at around 1.2850.
During the Asian trading hours, the data from Australia showed that the Unemployment Rate ticked up to 4.2% in July from 4.1% in June. Employment Change in the same period came in at +58.2K, surpassing the market expectation of 20K. After closing in negative territory on Wednesday, AUD/USD gained traction and climbed above 0.6600. In the meantime, the National Bureau of Statistics of China announced that Retail Sales grew by 2.7% on a yearly basis in July, up from the 2% increase recorded in June.
Japan’s Cabinet Office reported in the early Asian session that the GDP grew at an annual rate of 3.1% in the second quarter following the 2.3% contraction recorded in the previous quarter. USD/JPY failed to make a decisive move in either direction after this data and was last seen moving sideways in its weekly range slightly above 147.00.
EUR/USD gathered bullish momentum and reached its highest level of 2024 near 1.1050 on Wednesday. The pair stages a technical correction in the European morning on Thursday but manages to hold above 1.1000.
Gold struggled to attract buyers on Wednesday and lost more than 0.5% on the day. XAU/USD holds its ground in the European session and trades in positive territory above $2,450.
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.
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