Writer: Gertrude Chavez-Dreyfus
NEW YORK (Reuters) – The greenback rose on Thursday after knowledge confirmed the world’s largest financial system grew barely sooner than anticipated within the second quarter, barely decreasing expectations that the Federal Reserve will lower rates of interest by an additional 50 foundation factors subsequent month.
The report additionally elevated expectations that the U.S. might keep away from a recession fully or expertise solely a gentle one.
The greenback rose to a one-week excessive in opposition to the yen at 145.495 after the U.S. knowledge was launched, and was final up 0.6% at 145.385. The USD/JPY foreign money pair is probably the most delicate to financial expectations because it sometimes strikes in tandem with the two-year U.S. Treasury yield.
The greenback rose in opposition to the euro, with the only European foreign money down 0.3% at $1.1084.
Thursday’s knowledge confirmed gross home product (GDP) grew at an annualized price of three.0% within the second quarter, in accordance with the Bureau of Financial Evaluation’ second estimate. That was an upward revision from the two.8% progress price reported final month and better than the 1.4% progress price within the first quarter. Economists polled by Reuters had forecast GDP progress would stay unchanged at 2.8%.
A separate report confirmed preliminary jobless claims fell 2,000 to a seasonally adjusted 231,000 within the week ended Aug. 24.
The variety of folks receiving advantages after the preliminary week of support, a proxy for hiring, rose by 13,000 within the week ended Aug. 17 to a seasonally adjusted 1.868 million, close to ranges seen on the finish of 2021, the claims report confirmed. , which reveals that the variety of unemployed folks continues to extend.
“Though subsequent week’s labor market report is extra essential, there’s a threat that the info shall be revised down by 50 foundation factors,” stated Brad Bechtel, Jefferies’ world head of overseas alternate in New York. “At this level, a 25 foundation level lower is sort of a certainty. “
U.S. rate of interest futures are pricing in a 35% probability of a 50 foundation level lower subsequent month, down barely from 37% on Wednesday night time, in accordance with calculations by the London Inventory Alternate. The market additionally expects an rate of interest lower of about 102 foundation factors earlier than the tip of the yr.
After the report, the index rose 0.4% to 101.44. For the week, the inventory gained 0.7% and was on monitor for its greatest weekly achieve since early April.
Finish of month site visitors
Jefferies’ Bechtel stated: “The shopping for worth of the greenback has largely improved attributable to fund flows on the finish of the month. We may even see this proceed.”
Usually, buyers liquidate their positions as the tip of the month approaches, so when an asset (such because the U.S. greenback) sells off through the month, they usually purchase again that asset to steadiness their books or portfolios.
In August, the U.S. greenback depreciated 2.5%, the biggest month-to-month decline since November 2023.
“When the U.S. Greenback Index fell under the 101 space, it was oversold. I count on we’ll return to the 103-104 space. However once more, the labor market report shall be essential to this.”
Traders now await Friday’s launch of the U.S. core private consumption expenditures (PCE) worth index, the Fed’s most well-liked inflation gauge, which might present additional clues on the dimensions of price cuts on the September assembly, together with the tempo of the easing cycle. .
Within the euro zone, EUR/USD fell to a 10-day low of $1.1059 after hitting a 13-month excessive of $1.1201 on Friday. Inflation knowledge from Germany and Spain led buyers to extend their bets on the European Central Financial institution’s rate of interest lower cycle, placing some stress on the euro. Inflation fell in six key German states in August, suggesting nationwide inflation might fall considerably this month, whereas Spain’s inflation fell to its lowest stage in a yr.
Cash markets count on the European Central Financial institution to chop rates of interest by 67 foundation factors in 2024, up from about 63 foundation factors earlier than the info was launched.
foreign money
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The value is
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August
02:40
pm GMT
Describe RIC final yr U.S. proportion year-to-date proportion excessive and low
Change bid bid at shut
earlier
Assembly
USD 101.49 101.01 0.5% 0.12% 101.58 100.
Index 88
EURUSD 1.1066 1.112 -0.48% 0.25% $1.114 $1.1
No. 056
USD/JPY 145.41 144.64 0.44% 3% 145.39 144.
No. 225
EUR/JPY 1.1066 160.76 0.1% 3.4% 161.26 160.
04
USD/CHF 0.8488 0.8423 0.77% 0.85% 0.8493 0.84
Worldwide Area Station 01
GBP/1.3163 1.3191 -0.22% 3.43% 1.3227 US$1.1
USD 056
USD/CAD 1.3478 1.3481 -0.01% 1.69% 1.3491 1.34
Nadian No. 51
AUD/DOW 0.6793 0.6785 0.13% -0.37% $0.6824 $0.6
Chapter 781
EUR/Switzerland 0.9393 0.9365 0.3% 1.15% 0.9394 0.93
Article 54
Euro/star 0.8406 0.8428 -0.26% -3.02% 0.8434 0.84
Ling 03
New Zealand Greenback 0.6254 0.6246 0.14% -1.03% 0.6298 0.62 USD
USD/Do 42
two
USD/None 10.5127 10.4951 0.17% 3.73% 10.5353 10.4
Street 645
EUR/NOK 11.635 11.6732 -0.33% 3.66% 11.6971 11.6
is 245
USD/CHF 10.2468 10.1832 0.62% 1.79% 10.265 10.1
Eden 677
EUR/CHF 11.3413 11.3347 0.05% 1.93% 11.3603 11.3
109 hours
(This story has been refiled to alter the date in paragraph 9 from Tuesday to Wednesday and to say “finish of the month” as a substitute of “finish of the yr” in paragraph 11)