US GDP Surges Higher Taking Greenback For The Ride


U.S. Dollar Trading (USD) traded near week lows as Oil surged above $120 a barrel on Hurricane Gustav fears, pre US data. US GDP Data took the markets by surprise with a staggering 3.3% Q2 y/y rate. Forecasts had called for a solid 2.7% up from 1.9% in Q1. Government stimulus and surging exports were the main causes for the unexpected bounce which resulted in strong US stocks and Dollar. Oil fell off highs but markets are wary of another rally as Gustav approaches. Weekly Jobless Claims dropped to 425K from 435K previously. In the U.S. share markets, the NASDAQ was up 29 points (1.22%) and the Dow Jones was up 212 points (1.85%). Crude Oil closed up $-2.56 ending the New York session at $115.59 per barrel. Looking ahead, July Core PCE is forecast at 0.3% along with Consumption at 0.2%. Also released is the August Chicago PMI seen slightly lower at 50 from 50.8 previously and the August Michigan consumer confidence expected to rise slightly to 62.


The Euro (EUR) was able to test the topside twice as Euro data supported and Oil rallied. US GDP was able to subdue the Euro rally as Oil reveresed and Dollar rallied. German Unemployment dropped by 40K much more than the 10K expected. Overall the EUR/USD traded with a low of 1.4671 and a high of 1.4812 before closing the day at 1.4705 in the New York session. Looking ahead, Eurozone August CPI is seen slightly lower at 3.9% from 4.0% in July. Also released the July Unemployment rate forecast to remain at 7.3% and August Consumer Confidence is forecast at -20.