German inflation data and US GDP revision to draw attention

VaselineAugust 29, 2024

0 3 minutes read

German inflation data and US GDP revision to draw attention

Here’s what you need to know on Thursday, August 29:

Major currency pairs settled early on Thursday as investors sit on the sidelines ahead of the release of key macroeconomic data. Later in the European session, Germany’s Destatis will release preliminary consumer price index (CPI) data for August, and the US Bureau of Economic Analysis will release its second estimate of annualized gross domestic product (GDP) growth for the second trimester. The US economic file will also include weekly figures on initial jobless claims and data on pending home sales for July.

PRICE USD this week

The table below shows the percentage change in the US dollar (USD) against the major listed currencies this week. The US dollar was the strongest against the euro.

	USD	EURO	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.55%	-0.02%	0.25%	-0.37%	-0.14%	-0.94%	-0.84%
EURO	-0.55%		-0.62%	-0.29%	-0.91%	-0.78%	-1.46%	-1.36%
GBP	0.02%	0.62%		0.23%	-0.36%	-0.16%	-0.91%	-0.81%
JPY	-0.25%	0.29%	-0.23%		-0.61%	-0.29%	-0.94%	-0.98%
CAD	0.37%	0.91%	0.36%	0.61%		0.24%	-0.51%	-0.47%
AUD	0.14%	0.78%	0.16%	0.29%	-0.24%		-0.69%	-0.57%
NZD	0.94%	1.46%	0.91%	0.94%	0.51%	0.69%		0.09%
CHF	0.84%	1.36%	0.81%	0.98%	0.47%	0.57%	-0.09%

The heatmap shows the percentage changes of major currencies against each other. The base currency is chosen from the left column, while the quoted currency is chosen from the top row. For example, if you choose the US dollar in the left column and move along the horizontal line to the Japanese yen, the percentage change shown in the box will be USD (base)/JPY (quote).

The US dollar (USD) benefited from the market’s cautious stance on Wednesday and gathered strength against its main rivals. After hitting a more than one-year low near 100.50 on Tuesday, the U.S. dollar index gained nearly 0.5 percent on Wednesday before entering a consolidation phase around 101.00. Meanwhile, U.S. stock index futures were mixed as investors weighed chip giant Nvidia’s quarterly earnings report, which showed the company’s revenue hit a record $30 billion for the three months by July, more than doubling from a year ago.

EUR/USD turned south and came within a few pips of 1.1100 on Wednesday. The pair are holding their ground early Thursday but are struggling to muster a recovery momentum. At press time, EUR/USD was trading marginally higher on the day around 1.1130.

GBP/USD lost its bullish momentum on Wednesday and fell more than 0.5%. The pair is making a comeback in the European morning and is trading above 1.3200.

USD/JPY it posted small gains on Wednesday but remained in the weekly range. The pair is trading in a narrow channel above 144.50 at the start of the European session. Data from Japan showed earlier in the day that the consumer confidence index was steady at 36.7 in August.

Gold it dipped below $2,500 during US trading hours on Wednesday, but managed to close the day above this key level. XAU/USD rises to $2,520 on Thursday.

New Zealand’s ANZ business confidence index improved sharply to 50.6 in August from 27.1 in July. Following Wednesday’s slight pullback, NZD/USD has gathered bullish momentum and was last seen trading at its highest level since early January near 0.6300.

FAQs about GDP

A country’s Gross Domestic Product (GDP) measures the growth rate of its economy over a specific period of time, usually a quarter. The most reliable figures are those that compare GDP with the previous quarter, for example Q2 2023 vs Q1 2023, or with the same period of the previous year, for example Q2 2023 vs Q2 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. They can be misleading, however, if temporary shocks affect growth in one quarter, but are unlikely to last the whole year – as happened in the first quarter of 2020 when the covid pandemic broke out, when growth fell.

A higher GDP result is generally positive for a nation’s currency because it reflects a growing economy that is more likely to produce goods and services that can be exported, as well as attract greater foreign investment. Likewise, when GDP falls, it is usually negative for the currency. When an economy grows, people tend to spend more, which leads to inflation. The country’s central bank must then raise interest rates to combat inflation with the side effect of attracting more capital inflows from global investors, thereby helping the local currency to appreciate.

When an economy grows and GDP increases, people tend to spend more, which leads to inflation. The country’s central bank must then create interest rates to combat inflation. Higher interest rates are negative for gold because they increase the opportunity cost of holding gold versus putting money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for the price of gold.

VaselineAugust 29, 2024

0 3 minutes read

PRICE USD this week

FAQs about GDP

Vaseline

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