Dollar Stable after Strong GDP
The dollar is stable after a report showed that the US economy expanded faster than expected. The fourth quarter GDP was surprisingly revised from 2.2% to 2.5%, and the deflator remained unchanged at 1.6%. Besides, US weekly initial jobless claims fell from 316k to 308k, beating the forecast of 320k. Following the upbeat report, the dollar climbed from 117.40 to 117.90 against the yen, while the euro and sterling are still trading strong above 1.33 and 1.96 against the dollar respectively.
Recent US data were mixed, and the chance of a Fed rate cut in the near term was trimmed after Fed Chairman Ben Bernanke reiterated in yesterday??™s congressional testimony that its policy is still aimed at controlling inflation. The strong GDP report came up today added to the bright side of the dollar, however, it is not sufficient to save the dollar from consolidation.
Rising oil prices and geopolitical risks weigh on the dollar. Oil prices spiked to $68 per barrel this week amid geopolitical tensions over Iran and trade above $65 today.
The market will focus on US Personal Income, Personal Consumption, core PCE, Chicago PMI, and University of Michigan Consumer Confidence due tomorrow.
EURUSD will face interim resistance at 1.3350, followed by 1.3380 and 1.34. Additional ceilings will emerge at 1.3420, backed by 1.3450. Support starts at 1.33, backed by 1.3280, 1.3250 and 1.3230. Subsequent floors are eyed at 1.32.
GBPUSD encounters interim resistance at 1.9650, backed by 1.9680, and 1.97. Subsequent ceilings will emerge at 1.9730, followed by 1.9750 and 1.98. On the downside, support begins at 1.96, followed by 1.9570 and 1.9550. Additional floors are eyed at 1.9530, backed by 1.95 and 1.9450.
Yen Slid as Risk Aversion Eases
The yen pared its gains on Thursday as investor risks aversion eases and get back in the carry trades.
As we always repeated these two months, the yen is dominated by the direction of carry trades. With investors keep changing their risk appetite in reaction to global equity volatility and geopolitical threats, the USDJPY pair trades back and forth in the range between 116 from 118.50 against the dollar recently.
USDJPY encounters interim resistance at 117, backed by 117.30 and 117.50. Subsequent ceilings will emerge at 117.80, followed by 118 and 118.50. On the downside, support begins at 116.60 and 116.40, followed by 116. Additional floors are eyed at 115.70, backed by 115.50 and 115.