The dollar was unable to make any impression on the Euro in early Europe on Friday and drifted weaker as risk appetite was generally firmer. Ahead of the US economic releases, the Euro pushed to a high of 1.4150 before correcting slightly weaker.
US GDP contracted at an annualised rate of 1.0% for the second quarter compared with a revised 6.4% decline for the first quarter and this was slightly stronger than expected. Consumer spending was weaker than expected, but there was a stronger performance from exports and investment while inventories fell at a slower rate.
The Chicago PMI index strengthened to 43.4 for July from 39.9 the previous month. The data overall will maintain expectations that the US recession will end during the second half of 2009 and this also helped underpin risk appetite which lessened dollar demand
There were also important technical considerations on the last trading day of the month and position adjustment helped push the Euro to a high of 1.4275 before consolidation around 1.4250. The trading pattern will be watched closely next week to assess whether there is sustained Euro demand at the start of the new month.
Source: VantagePoint Intermarket Analysis Software
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