July 29 2017

July 28, 2017 (Tempus, Inc.) – The U.S. Dollar weakness continued following the release of Gross Domestic Product and Personal Consumption figures. GDP quarter-over-quarter growth for Q2 came in at 2.6%, just under the estimated 2.7% while Personal Consumption grew at its forecast 2.8% pace.

However, only Personal Consumption numbers in the first quarter were revised upward while the opposite occurred for GDP. Also worth noting is that Core PCE (Personal Consumption Expenditures), the Fed’s favored way to gauge inflation, improved to 0.9% over the expected 0.7%, however, worse in Q1 than thought. Overall, the slate of statistics signals that economic progress is just barely around the forecast and may not be good enough to surge the greenback against most counterparts, especially a much appreciated Euro.

We’ll see if the University of Michigan Sentiment index helps at 10AM or further sinks the buck. Chances of a hike in September are as low as 4.1% and December is not guaranteed at 41.8%. Will the economy be able to handle further monetary tightening? Stay tuned next week as Fed officials give us plenty of opportunities to explain their thoughts throughout.

EUR

The Euro remains on a path to similar appreciation as the dollar experienced in 2014 based on excellent numbers out of France and Spain. GDP in France grew 1.8% over the expected 1.6% annual pace, its longest streak of improvement since 2011. Additionally, Spain is growing at 3.1% yearly pace, the fastest since 2015.

There seems to be little resistance to Euro strengthening now that the value is based on real prosperity, the result of a more disciplined fiscal structure and easing methods from the European Central Bank that may soon be retrieved, only guaranteeing that the Euro stays afloat long-term. The Euro crushed the dollar in July, improving by 3.3%.

GBP

The Pound remains steady as it has an imbalance in the economy. Housing sector is struggling, companies are making plans to leave London’s financial center, but Retail Sales are great as revealed yesterday.
Overnight, however, we learned that GfK Consumer Confidence fell to its lowest reading since the Brexit referendum, once again showing that there is anxiety within the confines of the United Kingdom. Although GBP is up 2.1% for the month, these poor indicators could mount enough pressure to reverse these gains in the upcoming months.

 


USA