Good morning. The US dollar remains strong this morning after yesterday’s FOMC policy meeting. Chairman Yellen and company released a carefully worded statement that is resonating with dollar bulls for some minor tweaks made towards labor and inflation outlooks. In the minutes following the 2pm release, volatility was extreme as the greenback was sold hard, but as the market digested the statement, its more hawkish tone won the day, pushing the dollar to its best levels in one week. The more hawkish tone really puts today’s Q2 GDP release under the spotlight, as these economic results seem to be what is shaping the Fed’s decision points. Meanwhile in Europe, stronger than expected economic and business confidence measures were not enough to buoy the euro as the single currency continues to trade heavy this morning, below key psychological levels.
European bourses are another sea of green today following a number of positive economic releases overnight. While yesterday’s Fed statement continues to pace markets, some relative optimism has settled over mainland Europe with everything from German employment to Swedish GDP besting the market’s estimates on Thursday. Unfortunately, the euro cannot reflect this optimism as it remains a sell on rallies versus the US dollar. Tomorrow, Eurozone inflation and unemployment figures finish off this week’s data releases, coinciding with German retail sales, which should garner some attention. The Shanghai Composite was down another 2% today, weighing on Asia-Pac currencies. The Australian dollar lost a bit more ground as second quarter export prices fell 4.4%, more than expected.
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