The dollar remained higher against most major currencies on Thursday, after a batch of strong U.S. economic reports which boosted optimism over the strength of the economy. The Commerce Department reported on Thursday that U.S. gross domestic product grew at an annual rate of 3.7% in the quarter ending June 30, above expectations for growth of 3.2% and above the 0.6% growth posted in the previous quarter. Separately, the U.S. Department of Labor said the number of individuals filing for jobless claims last week declined by 6,000 from the previous week’s total of 277,000. Analysts had expected a 3,000 decline. In addition, the U.S. National Association of Realtors said its pending home sales index rose by 0.5% last month, disappointing expectations for a 1.0% gain. Meanwhile, investors continued to monitor developments in China. Shares in Shanghai rallied around 5% by the close of trading on Thursday, recovering part of their six day losses. The recent drop in Chinese stock markets has sparked fears of further economic downturn, something that undermines investor confidence in the government’s ability to revitalize economic growth. For today, the euro zone, Germany and Spain are to publish preliminary data on consumer price inflation, the U.K. is to release revised data on second quarter economic growth and the U.S. is to close the week with trade balance data, personal income and spending and revised data on consumer sentiment.
The euro fell lower against the dollar on Thursday as a string of positive macroeconomic reports from the U.S. improved market sentiment, sending global stocks and the dollar higher, supported mainly by strong data on U.S. second quarter growth. The Commerce Department reported on Thursday that U.S. gross domestic product grew at an annual rate of 3.7% in the quarter ending June 30, above expectations for growth of 3.2% and above the 0.6% growth posted in the previous quarter. In addition, jobless claims declined by more than expected last week while pending home sales was the only indicator that was reported slightly below expectations. Market focus remains on China for further signs of continuation in the current economic downturn, however, shares in Shanghai rallied around 5% by the close of trading recovering a major part of the recent losses. In the euro zone, Germany and Spain are to publish preliminary data on consumer price inflation while the U.S. is to close the week with data on trade balance, personal income and spending and revised data on consumer sentiment.
Pivot: 1.135 Support: 1.117 1.11 1.03 Resistance: 1.135 1.141 1.147 Scenario 1: Short positions below 1.135 with targets @ 1.117 & 1.11 in extension. Scenario 2: Above 1.135 look for further upside with 1.141 & 1.147 as targets. Comment: As long as 1.135 is resistance, look for choppy price action with a bearish bias.