It has been quite a benign session on the FX market thus far. First of all, the pound has managed to recover after fairly a bleak print of GDP. Nonetheless, it has to be mentioned, even though UK’s GDP growth could appear to be reassuring on the face of it, details unveil a much less rosy prospect. A contribution of consumption turned out to be one of the largest accomplice of the softer GDP breakdown. Keep in mind that the UK’s economy relies chiefly on consumption which accounts for a lion’s share of GDP growth. For that reason, an ongoing rebound of the GBP could be just temporary and the GBPUSD could resume its downtrend in the short-term.
The European stock markets have begun Thursday’s trading quite positively, gains have been no so heavy so far though. One could assume that investors could become more cautious given what we saw on Wall Street yesterday as all major indices failed to close above the breakeven line. Otherwise, the beginning of a symposium in Jackson Hole could make investors more careful as well as two pivotal speeches from Chairs of the FED and ECB will take place an the end of the week. Let us present possible ramifications for the EURUSD stemming from that event.
Getting back to the Asian session, there was a noteworthy release from New Zealand. Keep in mind that the New Zealand’s economy strongly relies on trade which accounts for a significant part of GDP growth, hence trade data is especially worth looking at. Trade balance came in at 85m (a surplus) in July against a forecast at -200m (a deficit). Let’s add that seasonal patterns suggested a drop in trade balance as it was in the prior years. Even as the data proved to be a bit better than anticipated, it provided just a very short-lived support for the NZD as we suggested in the morning. The NZD is losing against the greenback more than 0.1%.