U.S. equities and the dollar rise, as the USA’s Q2 GDP reading beats forecast, gold maintains its position above $1300 per ounce

Aug 31 • Morning Roll Call • 1878 Views • Comments Off on U.S. equities and the dollar rise, as the USA’s Q2 GDP reading beats forecast, gold maintains its position above $1300 per ounce

Despite the tropical storm Harvey making landfall for the second time in as many days and the clean up cost now being calculated at $200b by some estimators, the USA economy was delivered some good news on Wednesday, in the form of the GDP data coming in at 3% annualised for Q2, ahead of the forecast of 2.7% growth. Personal consumption also rose to 3.3% in Q2, again beating the forecast of 3%, suggesting that the U.S. consumer is, quite simply, continuing to confidently spend. Added to this encouraging hard data, the private payroll firm ADP stated that (according to its metrics), the employment change was 237k in August, beating expectations of 180k. The reading was a significant improvement on the 201k figure, recorded for July. This publication is often regarded as a portent and highly accurate prediction, to the NFP jobs data, which will be published on this coming Friday.

Predictably, as a consequence of the oil disruption situation, crude oil inventories fell sharply in the USA, whilst WTI oil fell by circa 0.7% to $46.16 per barrel. Gold fell during the New York session; its safe haven appeal receded in correlation with the U.S. dollar and equities rising, the precious metal fell by circa 0.1%, to $1308 per ounce, critically maintaining its position above the significant $1300 handle. The SPX closed up 0.46%, DJIA up 0.12% and the NASDAQ closed up 1.05%. The dollar index rose by circa 0.4%, recovering from the two year low posted earlier in the week, EUR/USD fell by approx 0.6% on the day to 1.1892, breaching S1, and arresting its slide before S2 was hit. GBP/USD rose to 1.2925, up approx 0.3% on the day, the British pound enjoyed gains versus all of its main peers, during Wednesday’s trading sessions. USD/JPY rose by approx 0.5% (whilst breaching R1), to close the day out at 110.26.

In Europe, the UK’s FTSE 100 closed up 0.38% on the day, ceasing its recent slide, which had witnessed it drop to a three/four week low, on a closing basis. The DAX closed up 0.47%, France’s CAC up 0.47% and euro STOXX 50 up 0.46%, the majority of Europe’s indices recovering some of the value shed during Tuesday’s sharp sell off. The partial recovery was propelled by many of the day’s economic calendar news events, posting favourable results for the continent. All of the various sentiment readings for the Eurozone came in above the forecasts, whilst Germany’s inflation (CPI) metric came in right on forecast at 1.8%, on an annualised calculation. The UK’s mortgage approvals increased ahead of forecasts, suggesting further house price rises are in the pipeline. However, personal credit fell by approx 10% in the month of July to £1.2b, adding credibility to the belief (amongst many analysts) that there’s a deep chasm, a dividing line, developing between those U.K. citizens solvent enough to obtain a substantial mortgage and those unable (or not confident enough), to increase their personal debt.

Significant economic calendar events for August 31st, all times quoted are London (GMT) time

06:00, currency impacted EUR. German Retail Sales (YoY) (JUL). The forecast is for a rise to 2.9%, from the 1.5% posted in June.

07:55, currency impacted EUR. German Unemployment Rate s.a. (AUG). The prediction is for the rate to remain unchanged, at 5.7%.

09:00, currency impacted EUR. Euro-Zone Consumer Price Index Estimate (YoY) (AUG). The expectation is for CPI to rise moderately to 1.4%, from the 1.3% reading recorded in July.

09:00, currency impacted EUR Euro-Zone Unemployment Rate (JUL). The anticipation is for the current rate of 9.1%, to remain unchanged.

12:30, currency impacted CAD. Gross Domestic Product (YoY) (JUN). The forecast is for a fall to 4.1%, from the recent 4.6% growth posted in May.

12:30, currency impacted USD. Initial Jobless Claims (AUG 26). The expectation is for a figure of 238k to be published, up moderately from the 234k revealed last week.

12:30, currency impacted USD. Personal Consumption Expenditure Core (YoY) (JUL). The prediction is for a reading of 1.4% to be revealed, a fall from the 1.5% registered in June.

14:00, currency impacted USD. Pending Home Sales (YoY) (JUL). House sales are expected to show a modest fall of 0.5% growth, from the 0.7% recorded in June.


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