North American Summary and Highlights 29 August

North American session

The USD bounced on an upward revision to Q2 US GDP to 3.0% from 2.8%, but most of the gains were erased by the close. USD/JPY saw the strongest bounce, peaking at 145.55 from around 144.65 before the data, before slipping back to around 144.85. EUR/USD slipped to 1.1075 from near 1.11 before the data, after bottoming at 1.1056. EUR/GBP saw little change but EUR/CHF rose to .9380 from .9360, after a peak at .94. AUD/USD saw marginal slippage to near .68 while USD/CAD edged up to 1.3485 with a fading of equity gains weighing on the commodity currencies.

The upward revision to GDP was more than fully explained by consumer spending, which was revised up to 2.9% from 2.3%, with most other components revised down, as was the core PCE price index, to 2.8% from 2.9%. July’s advance goods trade deficit increased to $102.7bn frim $96.6bn while initial claims were little changed at 231k from 233k. Later July pending home sales saw a sharp 5.5% decline. 

European morning session

The EUR fell back through the European morning following weaker than expected preliminary August German state CPI data as well as weaker than expected preliminary August Spanish CPI data. The German data suggested a fall in the national y/y rate of around 0.5% to 1.8% against the expected 0.2% decline to 2.1%. EUR/USD fell 50 pips to 1.1080, and dragged most European currencies lower with it, although EUR/GBP fell around 15 pips to test 0.84. 

There were only modest declines in EUR/SEK and EUR/NOK, despite the stronger than expected Swedish Q2 GDP data released earlier, which showed a 0.3% q/q decline against a consensus expectation of a 0.8% fall. The better than expected performance was, however, due mostly to net exports, so was seen as less likely to restrict Riksbank easing.