Sat, Jan 22, 2022 @ 14:26 GMT
HomeContributorsFundamental AnalysisDollar Recoups Modestly on Hopes of Business Spending Underpinning GDP Growth

Dollar Recoups Modestly on Hopes of Business Spending Underpinning GDP Growth

The dollar somewhat rebounded during the European session with the dollar index up 0.1%. The latest data on durable goods orders, jobless claims and trade balance on goods supported the US currency to retrace some of earlier losses post the Federal Open Market Committee meeting. The euro declined against the greenback by 0.35% as the US session was about to start.

Monthly orders for durable goods in the US rose 6.5% last month, expanding at more than double the expected rate and coming in above the upwardly revised figure for May of a 0.1% decline from the original report of 0.8% fall. An increase in wholesale inventories (0.6% jump versus expectations of a 0.2% gain) and a narrowing in the goods trade deficit in June added to the hopes of strong GDP expansion in the second quarter. Traders could be putting their bets on rising inventories implying suppliers’ optimism about future sales, rather than a slowdown in moving goods off the shelves. The dollar strengthened against the yen and the euro following the release of the string of data. US preliminary GDP figures are due tomorrow. Dollar/yen was last trading at 111.30, while euro/dollar was at 1.1699.

More out of the US, the Labor Department issued last week’s unemployment benefits report, signaling still a healthy labor market. Initial claims for state unemployment benefits rose 10,000 to a seasonally adjusted 244K for the week ended July 22, above the forecasted level of 241K. The four-week average, which irons out weekly volatility, was unchanged at 244K last week. Linked to capacity changes in car-makers assembly plants, the data has been volatile in recent weeks. The volatility may extend beyond summer months as some of the car producers, such as GM prolong the summer shutdowns due to a sales slowdown.

The euro was under pressure against the US dollar during the European session linked to a combination of profit taking following yesterday’s rally and good data helping the greenback.

Sterling was broadly flat against the greenback following yesterday’s rally on the back of the weakness in the US dollar. The pound/dollar pair was trading at 1.3119 as US traders were starting the day.

The loonie retraced some of this week’s gains, falling short of a two-year high ahead of tomorrow’s key monthly GDP figure. Dollar/loonie was last trading at 1.2480.

Moving away from forex markets to commodities, oil prices continued gaining during the European session supported by a steeper-than-expected slide in US crude inventories last week. WTI was last trading at $48.82 a barrel while Brent was at $51.09. Gold was up during the day to last trade at $1,261.55 an ounce, unfolding yesterday’s rally. The demand for the precious metal has been rising on the recent softness in the US currency.

XM.comhttp://clicks.pipaffiliates.com/c?c=231129&l=en&p=0
XM is a fully regulated next-generation financial services provider of online trading on currency exchange, commodities, equity indices, precious metals and energies, with services to clients from over 196 countries worldwide. Founded in 2009 by market experts with extensive knowledge of the global forex and capital markets and with the aim to ensure fair and reliable trading conditions for every client, XM has reached international recognition by virtue of its unbeatable execution of orders, spreads as low as zero pips on over 50 currency pairs, gold and silver, flexible leverage up to 888:1, and personalized customer engagement to foster clients’ success.

Featured Analysis

Learn Forex Trading