By Connor Campbell, Financial Analyst at Spreadex.com
The dollar flexed its muscles this morning, allowing the European indices to indulge in their weakened currencies.
The greenback still seems to be benefiting from yesterday’s better than forecast Q2 GDP reading. The dollar rose 0.4% against the pound, forcing it below $1.29, and 0.3% against the euro, leaving the currency under $1.19 despite a jump in eurozone inflation. This does look set to lead to another muted open from the Dow Jones, though even the projected 40 point increase would take the index back above 21900.
If the dollar is still hungry for data then it has a 5 course meal to dine out on this afternoon. Arguably the most important item is the core PCE price index reading, given that it is reportedly the Fed’s favourite inflation measurement; the dollar likely won’t find much joy here, however, considering it's expected to remain unchanged at 0.1%. Elsewhere the personal spending and jobless claims numbers come out before the bell, with the Chicago PMI and pending home sales figures released once things have are up and running on Wall Street.
With the pound and euro duffed up by the dollar, the European indices could continue yesterday’s rebound. The FTSE actually tripled its gains as the day went on, the 0.6% rise finally allowing it to re-cross 7400. As for the eurozone, the DAX and CAC jumped 0.6% and 0.7% respectively, the pair overjoyed at the sight of a groggy euro.
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