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Greenback Maintains Upward Bias Following Stronger US GDP Revision

FOREX
  • The USD index has risen a further 0.4% on Thursday, extending on Wednesday’s firmer price action. The main impetus came from a strongly revised first quarter GDP figure from 1.3% to 2.0% Q/q. With markets not expecting a surprise, given it was the third reading for the data, the greenback surged in the immediate aftermath and has broadly consolidated at the week’s best levels approaching the close.
  • The euro is one of the worst performers, with EURUSD down 0.42% approaching the APAC crossover. The pair was unable to hold onto moderate gains above the 1.09 handle following some marginally firmer Eurozone inflation figures and this may have exacerbated the reversal lower following US GDP. Price has narrowed the gap with key support at 1.0852, the 50-day EMA. A clear break of this average would strengthen a bearish threat and signal scope for a deeper corrective pullback.
  • USDJPY maintained its string of positive trading sessions, making fresh trend highs in the process. Spot looks set to close right on session highs, very close to significant pivot resistance around the 145.00 mark. While topside momentum appears unwavering, with yield differentials continuing to be the dominant driver, market participants remain cautious as we approach historical levels where Japanese officials have decided to intervene to bolster the JPY.
  • The focus overnight on Friday will be on China’s official PMI data for the latest signs regarding the health of the Chinese economy. Japanese Tokyo Core CPI will also cross. In Europe the focus will be on the latest flash estimate for Eurozone HICP inflation, which precedes US Core PCE Price Index and Canadian GDP.
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