EUROZONE BUSINESS AND CONSUMER CONFIDENCE SURGES, US GDP GROWS
Today was a busy day in regards to economic data releases. Gross Domestic Product in the US grew at 3.1% in the second quarter, slightly above the previous forecast. It is the best quarterly growth in almost two years. The economy at its core remained stable as growth in the job market and a booming stock market encouraged households to spend. According to advance economic indicator reports from the US Commerce Department, the trade deficit for US goods narrowed 1.4% and came in at $62.94 billion in August as compared to July. Exports rose 0.2% and goods imports decreased 0.3%. But the Commerce Department also warned that the data may have been affected by Hurricanes Irma and Harvey as ports were closed and caused shipment diversions and delays.
The euro received support after the European Commission earlier today released the economic sentiment indicator, which combines both the business and consumer confidence reports. Economic sentiment rose to 113 in August from 111.9 in July, the highest level its been since June 2007. The strong growth in business confidence implies that the Eurozone economy will be enjoying faster growth in the final months of the year. More confident businesses tend to invest more while households spend more freely. Increases in aggregate confidence will also give the European Central Bank some comfort as it looks to reduce its stimulus program from as early as next year. ECB's economists are also expecting 2.2% economic growth for the region. Inflation data released earlier today suggests that the inflation rate has not moved toward the target in September. Germany's consumer prices rose 1.8% compared to a year earlier and in Spain the rate of inflation slowed to 1.9% from 2% in August.
AUD/USD is consolidating and trading around last month's low at 0.78072. The pair is trading below the 50- day moving average, which plays a resistance role. The relative strength index is mixed and calls for a bearish movement. As long as the price remains below 0.7887 (yesterday's high) look for further decline to 0.7798 (today's low) and 0.7755. Alternatively, above 0.7887 (yesterday's high) look for 0.7907 (last week's low) and 0.7945.
EUR/USD rebounded from 1.17162 (this week's low) but the bias remains bullish. The extent of the rebound however should be limited. The downward movement is reinforced by the declining 50 day moving average and the relative strength index is also showing a bearish outlook. So, below 1.18606 (last week's low) look for further downside to 1.17163 (this week's low) and 1.16616 (last month's low). Alternatively, above 1.18606, look for 1.1900 and 1.19360 (this week's high).
NZDUSD is expected to trade with a bearish outlook as the process of lower highs and lows remains intact. The 50 day moving average and 20 day moving average are still heading downward. So as long as the price remains below 0.72467 (last week's low) look for downside targets at 0.71656 (today's low) and 0.71304 (last month's low). Alternatively, above 0.72467 look for 0.7285 and 0.7305.