Aug 29 2008
The Greenback Ranges after Strong Bullish Move
The USD underwent a bullish trading session yesterday, as it appreciated against all of its major currency rivals. The dollar rose 0.1% and closed at around 1.4710 versus the Euro in yesterday’s trading session. Also, the USD saw steady gains against the GBP and CHF.
The greenback saw gains yesterday as Preliminary GDP figures beat out already positive forecasts which showed an expected rise of 2.6%. Instead, the indicator rose 3.3% and added to another day of surprising US economic data supporting the USD. In addition, a rally in U.S. stocks, seen mostly by industrial and financial companies as well as a decline in oil prices also boosted the greenback. The US economy grew at a 3.3% annualized rate in the second quarter of 2008, a sharp upward revision from the 1.9% growth reported in the US Department of Commerce’s first estimate a month ago and higher than the 0.9% rise in the first quarter. The 3.3% GDP increase is the fastest pace since the third quarter of 2007, when GDP grew at a 4.8% annualized rate. The report prompted investors to buy back the dollar, with bids accelerating broadly as U.S. stocks climbed and oil prices plummeted midway through the New York session. In addition, the unemployment claims report saw a decline of 2000 from the expected mark of 427K. The swing in a Preliminary GDP, despite unemployment claims data adds even more to the growing speculation that the US could begin to see steady growth. The data also backed expectations of U.S. rate hikes this year, which fueled a rebound in the dollar during trading session yesterday.
Today we can expect a slower pace to the news cycle from the US as few events of lesser significance will be released. But those events should contribute little to volatility.
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