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Dollar dominance was the name of the game, as the U.S. currency managed to brush aside downbeat Fed remarks and a GDP downgrade.

The Canadian dollar also chalked up some gains thanks to another record-high for crude oil while sterling drew support from Haldane’s comments.

  • U.S. final Q1 GDP downgraded from 2.2% to 2.0% vs. expectations of no change
  • U.S. initial jobless claims up from 218K to 227K vs. 220K forecast
  • U.S. final GDP price index upgraded from 1.9% to 2.2%
  • U.K. GfK consumer confidence index fell from -7 to -9
  • BOE official Haldane: MPC would’ve hiked if not for data misses
  • Haldane: Seeing little to no slack in U.K. economy
  • Tokyo core CPI up from 0.5% to 0.7% vs. 0.6% forecast
  • Japanese preliminary industrial production down 0.2% vs. projected 1.1% drop
  • Japanese unemployment rate down from 2.5% to 2.2%

Major Events/Reports:

Haldane’s hawkish remarks

BOE MPC member and Chief Economist Andy Haldane sounded chipper in his assessment of the U.K. economy during his testimony at the Academy of Social Sciences Annual Lecture in London.

He noted that the U.K. economy is expanding at a 1.5% trend rate but that productivity is their greatest challenge now. Haldane also acknowledged that the labor market has been tight and that there are positive wage pressures.

What probably encouraged pound bulls to charge was his quip on how he probably would’ve pushed for a rate hike in their latest decision if it hadn’t for the latest set of data misses. In particular, he pointed to signs of consumer spending faltering leading up to the May meeting.

He added that the next set of figures since that meeting have bounced back strongly, citing:

“The underlying picture now appears to be one of gently rising household spending. This is being supported by highly accommodative credit conditions and now-positive growth in inflation-adjusted wages.”

Of course he also had a few words to say about the World Cup and managed to use it as a metaphor for downside surprises (Hello, Germany!) in data. He concluded:

“It is the direction of travel and likely destination of interest rates, rather than the precise timing of any move, that matters for their decisions and hence for the fortunes of the economy.”

Mostly downbeat U.S. data

Uncle Sam’s figures weren’t all that impressive in the latest New York session, yet the slight bounce in U.S. equities may have shored up the Greenback.

  • Dow 30 index is up 98.46 points to 24,216.05 (+0.41%)
  • Nasdaq is up 58.60 points to 7,503.68 (+0.79%)
  • S&P 500 index is up 16.68 points to 2,716.31 (+0.62%)

The final GDP reading for Q1 was downgraded from 2.2% to 2.0% instead of staying unchanged as many expected. As it turned out, components for personal spending and export activity were revised lower, from 1.0% to 0.9% for the former and 4.2% to 3.6% for the latter.

On a less downbeat note, the contribution from business investment was upgraded from 9.2% to 10.4%. The final GDP price index was also raised from 1.9% to 2.2% to reflect stronger price pressures.

Initial jobless claims showed a larger pickup in unemployment of 229K versus the earlier 218K increase and the projected 222K figure.

Major Market Mover(s):

USD

Despite cautious commentary from some Fed officials and downbeat data underscoring their views, the Greenback managed to outpace most of its peers in the recent session.

USD/JPY climbed from 110.22 to a high of 110.65, AUD/USD struggled to hold on to .7350, NZD/USD is down to .6749, USD/CHF popped up to a high of .9992, and GBP/USD fell to a low of 1.3065.

CAD

Loonie bears must’ve booked profits from the currency’s earlier slide as July rate hike bets returned. Either that or the oil-related currency was able to benefit from the commodity’s surge to its three-year high on Iran sanctions.

USD/CAD fell from 1.3315 to 1.3258, CAD/JPY pulled up from 82.79 to 83.27, EUR/CAD slipped to 1.5340, GBP/CAD is down to 1.7339, and AUD/CAD dropped to .9848.

GBP

Pound bulls found reason to charge on stronger BOE hike expectations in the next meeting thanks to Chief Economist Haldane’s remarks.

GBP/JPY bounced off a low of 143.80 to 144.39, EUR/GBP retreated from .8871 to a low of .8839, GBP/AUD bounced to 1.7843 but fell back to the 1.7800 handle, and GBP/NZD rose to 1.9388.

Watch Out For:

  • 1:30 am GMT: Australia’s private sector credit (another 0.4% gain expected)
  • Tentative: Australian HIA new home sales (previous 4.2% decline)
  • 5:00 am GMT: Japanese consumer confidence index (rise from 43.8 to 43.9 expected)
  • 5:00 am GMT: Japanese housing starts (5.9% drop expected, 0.3% gain previous)