Currency Market Analysis

Jul 31, 2017 | Currency Market Analysis

Global Themes

USD weakens as GDP beats, but wages and inflation misses

The US dollar was mostly weaker on Friday as markets reacted to a mixed US GDP reading.

US second-quarter gross domestic product came in a 2.6% in annual terms – just above market expectations. However, the reading showed an ongoing slowdown in wage and price growth.

The weakening in wages growth and inflation pressures in the US has recently worried the US Federal Reserve.

Financial markets assign a 35% chance of a Fed hike by the end of the year.

Franc falls

The USDSGD finished 0.2% lower with its weakest close since September 2016

The euro was stronger after a better-than-expected reading from German inflation.

Across markets, the largest losses were in the Swiss franc. The improving economic performance of the euro zone has seen the CHF weaker.

Big week

We’ve got a huge week of economic data.

Today, Chinese PMI, which provides an up-to-date reading on economic activity in the manufacturing and serves sectors, is due at 9.00am, while euro zone inflation is due at 5.00pm.

Tomorrow, the Reserve Banks of Australia meets with markets looking to focus on any commentary surrounding the stronger Australian dollar. European GDP is also due on Tuesday.

Later in the week, the US non-farm payrolls will be released on Friday night.

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