Friday July 30, 2004 - 09:44:49 GMT
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INVESTICA Ltd - www.investica.co.uk
GDP data vital for dollar
The dollar's immediate direction will be set by the US GDP report later today. A figure above 4.0% would be likely to trigger further dollar buying, but the US currency will find it more difficult to make and sustain progress as short positions have now been covered. The Euro is still likely to secure immediate support at the 1.20 level unless the US figure is very strong and a weak figure could trigger sharp dollar selling towards 1.2150.
The dollar remained volatile on Thursday as traders tested dollar support and resistance levels. The US currency attacked the 1.20 level against the Euro, but retreated back to 1.2050 in New York and remained close to this level in early Europe on Friday with a slightly firmer Euro bias. There will be further Euro buying interest at 1.20.
The US data failed to offer any incentives with jobless claims rising slightly to 345,000 from 341,000 previously, while wage costs were subdued. The US GDP report today will be potentially more significant. A figure above 4.0% would increase optimism over the US economy and trigger dollar buying whereas a figure below 3.5% would be disappointing. The Chicago PMI report will also be significant as it is a forward-looking indicator. The employment report next week will be a crucial report for the US economy and dollar.
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