Today’s data was positive for the US economy, as the consumer expenditure price index for the second quarter fell to 2.8%, while GDP results improved from 2.8% to 3.0%, beating expectations.
The weekly unemployment data also came in lower than expected at 231K compared to 232K forecast. Average jobless claims in 4 weeks fell from $236.25K to $231.5K.
This necessitated a rise in the US dollar index to 101.382, up 0.4%. Gold futures rose 0.3% to $2,545.55 an ounce. Spot gold contracts rose 0.43% to $2,513.12 an ounce.
Dollar before data release
The U.S. dollar rose on Thursday, rebounding from recent lows ahead of a series of major economic readings, while the euro fell.
At 15:20, 10 minutes before the release of the weekly unemployment data, the Fed preferred inflation data and the GDP revision, the US dollar index is at 101.157 against a basket of foreign currencies, up 0.17%.
Dollar recovers from lows
The dollar has recovered from recent lows, buoyed by its safe-haven status on fears of renewed trade tensions between China and the West as well as growing geopolitical concerns in the Middle East, Libya and Ukraine.
However, the greenback remains under pressure given the prospect of US interest rates falling next month, with the Federal Reserve poised to reverse the strong tightening cycle that has supported the US dollar for most of the past two years.
The US dollar has fallen 2.9% in the month so far, putting it on track for its biggest monthly decline in nine months.
The focus shifts to more important economic data later in the session, including weekly preliminary jobless claims and a revised reading of second-quarter GDP data.
The first reading of second-quarter GDP showed that the U.S. economy remains resilient, raising hopes that the world’s largest economy was poised for a soft landing, but recent data also showed a weakening labor market.
The PCE price index data – the Fed’s preferred inflation gauge – is due on Friday and is likely to weigh on the outlook for interest rates.
Euro affected by German inflation decline
In Europe, the EURUSD forex pair traded down 0.4% to 1.1079, after preliminary data from German states indicated a decline in national inflation this month, as well as the broader figure in the eurozone.
Inflation in North Rhine-Westphalia, Germany’s most populous state, fell to 1.7% in August from 2.3% in July, and there were similar declines in other states.
Germany will publish its national figures later in the session, ahead of the release of eurozone inflation data on Friday, which is expected to fall to 2.2% in August from 2.6% in the previous month.
The ECB began cutting interest rates in June, and a sharp drop in inflation is likely to prompt policymakers to cut them again next month.
The GBPUSD forex pair was also trading flat at 1.3188, not far from Tuesday’s peak of 1.3269, its strongest level since March 2022.
Yen stabilizes after strong rally
In Asia, JPY/USD rose 0.1% to 144.72, steadied after posting a strong rally earlier this week.
The yen was buoyed by persistent bets that the Bank of Japan will raise interest rates further this year, following a series of hawkish signals from Bank of Japan officials. But inflation data from the country somewhat defied the Bank of Japan’s expectations of a steady rise in inflation.
{{2111|CNUSD}} traded down 0.3% to 7.1060, supported by a series of stronger-than-expected fixations by the People’s Bank.
But sentiment toward China remained pessimistic amid fears of a trade war with the West, especially after Canada joined the United States and the European Union in imposing heavy tariffs on Chinese imports of electric vehicles.
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