Dollar Fails to Extend Post 2Q GDP Recovery

Dollar Fails to Extend Post 2Q GDP Recovery

There is no cheering in the financial markets on better than expected 2Q GDP report from US which showed recession in the economy eased quicker than expected. US stocks open nearly flat which commodities recover from earlier knee jerk reactions. Dollar fails to extend post GDP recovery and is back under pressure against most major currencies. After all, there isn't any clear direction in the financial markets in general.

Real GDP in US dropped -1.0% annualized rate in 2Q, better than expected -1.5% and showed significant improvement over 1Q's -5.5% contraction. However, personal consumption expenditures dropped -1.2% annualized rate versus a slightly increase in 1Q, suggesting consumer demand remains weak. Investment was another negative in the GDP report even though the decline of -13.5% was much better than 1Q's -39%. GDP price index rose just 0.2% comparing to expectation of 1.0%. Data from Canada saw GDP dropped more than expected by -0.5% mom in May.

Released earlier, Eurozone CPI dropped more than expected by -0.6% yoy in July comparing to consensus of -0.4%. However, unemployment rate rose slightly from downwardly revised 9.3% to 0.4% in Jun against expectation of 0.7%. Swiss KOF leading indicate also improved more than expected to -0.99 in Jul. Released from UK, Gfk consumer confidence was unchanged at -25 in July.

Data from Japan released overnight were generally negative. CPI inflation dropped more than expected by -1.7% yoy in June, a record low in at least 33 years. Unemployment rate rose more than expected to 5.4% in June, its highest level since June 2003. Household spending rose less than expected by 0.2% yoy in June. Housing starts dropped more than expected by -32.4% yoy in June. Though, Manufacturing PMI is back above 50 at 50.4 in July.