North American Summary and Highlights 25 July
Overview - The USD was lifted by strong US GDP data, but the move was sustained only on USD/JPY.
North American session
Q2 US GDP came in stronger than expected at 2.8% with core PCE prices on the firm side of expectations at 2.9%. June durable goods orders did plunge by 6.6% on aircraft but the ex-transport gain of 0.5% was on the firm side of trend, while initial claims slipped by 10k to 235k. The data gave a boost to the USD, most notably USD/JPY, which bounced from near 152.70 to see highs above 154.
Elsewhere however the USD gains were modest and brief. Commodity currencies outperformed with AUD/USD rising to .6550 from .6525 and USD/CAD slipping to 1.3815 from 1.3845, though equity gains faded in the afternoon. EUR/USD kept to a tight range centered on 1.0850 but outperformed GBP, with EUR/GBP advancing to near .8440.
European morning session
The USD was mixed through the European morning in what was generally a risk negative session of trading. USD/JPY lost around 35 pips to 152.25, after hitting a low slightly below 152, while EUR/USD edged up around 10 pips to trade above 1.0850. USD/CHF lost 50 pips to 0.8880, but AUD/USD was 25 pips lower at 0.6525. Scandis were also weaker, with EUR/NOK hitting an all-time high above 12.06 (pandemic spike excluded), and EUR/SEK also rising 0.5% to 11.75. GBP/USD was little changed.
The background to this was more equity market weakness, with European equities down around 1.5%, and European yields also slipped lower. Newswise we saw a weak French INSEE survey which produced the lowest index since 2013, and a weaker than expected German IFO, although this was less of a surprise after yesterday’s softer PMIs. The Eurozone M3 data was stronger than expected, rising 2.2% y/y, but household lending growth remained weak at 0.3% y/y.