Dollar Recovery Continues After GDP Revision, Philly Fed Next
Dollar’s recovery continues in early US session after downward revision in Q3 GDP.
US Real GDP growth in Q3 was revised down to 2.0% previously estimate of 2.2%. GDP price index revised up to 1.9% from 1.8%. Meanwhile, personal consumption and PCE core were left unchanged at 2.8% and 2.2% respectively. Jobless claim came in at 315k, inline with consensus. Leading indicator increased 0.1% in Nov, above expectation of 0.0%. Philly Fed index will be featured next.
Canadian dollar was hit hard by weak growth data. Oct GDP was flat comparing to expectation of 0.4% while prior month was revised down to 0.4% drop. Retail sales dropped 0.7% with ex-auto sales dropped 0.7% too. below expectation of 0.5% and 0.2% fall. Continuous weakness in retails sales will like prompt BoC into rate cut in second quarter of next year.
EUR/USD
Daily Pivots: (S1) 1.3139; (P) 3192; (R1) 1.3225;
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EUR/USD’s correction from 1.3244 continues today. At this point, downside of this correction is still expected to be contained above 1.3105 resistance turned support. Above 1.3211 resistance will suggest that such correction has completed and bring rise from 1.3051 has resumed for 1.3291 resistance and then retest 1.3364 high.
As discussed before, prices action from 1.3362 is treated as correction to rally from 1.2760. Such correction should have completed at 1.3051, after meeting 1.3056/61 target (100% projection of 1.3364 to 1.3129 from 1.3291 at 1.3056, 50% retracement of 1.2760 to 1.3362 at 1.3061). Subsequent rebound from there could represent resumption of the whole rise form 1.2483 but a decisive break above 1.3364 resistance is needed to confirm and bring further rise towards next upside target of 1.3668 (04 high). Otherwise consolidation may still continue to extend.
On the downside, below 1.3105 resistance turned support is needed to turn short term bias back to the downside and indicate correction from 1.3362/64 is still in progress. But even in such case, downside is still expected to be contained above 1.2911/38 support (50% retracement of 1.2483 to 1.3362 at 1.2923, 161.8% projection of 1.3364 to 1.3129 from 1.3291 at 1.2911) and bring another rally.
In the long term picture, the medium term rise from 1.1639 could either be resumption of this multi-year up trend or just part of a larger scale consolidation that started at 1.3668. But neither case is confirmed yet. Nevertheless, medium term outlook remains bullish with EUR/USD saying above 1.2760 support. Decisive break of 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822 will confirm long term up trend has resumed for 1.4 psychological resistance first. On the downside, break of 1.2760 support will turn medium term outlook neutral and argue that whole medium term rally from 1.1639 has possibly completed. Focus will be shifted by to 1.2483 key support and break will confirm this case and bring much deeper decline.
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY) here.
Shing-Ip Tsui is the founder and CEO of
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