• US Q2 GDP falls 1.0% slightly better than expected, consumer spending weak; Q1 revised much weaker, down -6.4%
• NY City NAPM rises to 48.3 from 44.8
• Chicago PMI rises to 43.4 in July from 39.9, slightly better than expected
• IMF: Dollar moderately overvalued
• JP Morgan raises Q3 GDP forecast to 3%
• Fitch maintains UK AAA rating
• Cash for clunkers success has economists forecasting a jump in US auto production in second half with positive GDP impact
• Obama: Guardedly optimistic economy has turned quarter
• ECB Sources: ECB preparing further non-standard measures in case rebound does not take hold- Market News International
• US equities ended essentially unchanged, rise 7.8% on the month;  bond yields fall 12 bp after mixed GDP, auction aftermath
• Oil rises 3.2% to $69.05, Copper rises 2.5%, CRB index up 1.7%

Month-end considerations overshadowed economics and technicals today as very large interest to sell dollars as a result of big jumps in US asset prices this month was a driving force. Passive investors typically hedge the currency changes to their portfolios once a month at month-end. With the S&P up 8% in July, that meant a lot of dollars need to be sold. The currencies that were most heavily rumored to be movers today were in fact the leaders as EUR/USD, GBP/USD, AUD/USD were spotlighted.

EUR/USD dipped to the 1.4100 area after the big downward revision to US GDP but it soon began its recover and the closer we got to the end of the day, the firmer EUR/USD got. At the 15:00 GMT fixing, EUR/USD was at 1.4175. Traders apparently believed (as I did) that once the fixing flows were out of the way EUR/USD would lose its bid. Whoops! A quick 100 pips later, the market finally got square.

Similar story in cable as that pair rose within a ten pips of its highs for the year at 1.6744 before stalling.

AUD/USD made a new high, rising through 0.8338 in thin afternoon trade and reaching 0.8367.

I’ll be off Monday, Tuesday and Wednesday next week. I’ll leave you in the capable hands of Mark Mitchell of FX Hub fame. Have a great weekend, all!

Any 0.8350 barrier in AUD is toast as prices rises as high as 0.8362. While US equities are not feasting on dollar weakness as they usually do, commodity prices certainly are. Copper is up 2.3% and the CRB is is up 1.7%.

Next resistance is at 0.8377, the 61.8% of the 0.9849/0.6010 decline. Sean has been highlighting the importance of this level for days.

Looks like locals were fading the oil rally this afternoon and paid up bigtime into the close. Oil ramped up to 69.75 in the last few minutes, shooting up over a dollar i one five minute span on heavy volume. It’s not just the forex market that got a little ugly today. $68.78 to 69.75 on one five-minute bar…ouch.

The lower dollar is finally filtering through to stocks as shares edge back into positive territory after being flat most of the day. The S&P is up about 0.3% with a bit under two hours to go in the session. No matter what happens the rest of the day, it should be the best July in 20 years for equities.

EUR/USD is consolidating in the 1.4265 area, below the 1.4279 highs and the 1.4305 top put in place earlier this year.

2009 tops in Cable and Aussie are being closely this afternoon. 1.6744 is the cable high while 0.8338 is the high in Aussie to beat. Barriers are rumored just above both levels.

With any luck, the market may have shot all its bullets for today and we will have a few hours of backing and filling before calling it a week.

EUR/USD is trading in the 1.4250 area while cable has dipped back below 1.6700. AUD/USD is in the 0.8820s after failing to overcome 0.8338 resistance.

Obama just finished some comments on the economy, saying next week’s unemployment report will show far too many have lost their jobs ( a safe bet when even one last job is a “tragedy” to a politician when cameras are present..) and that he is guardedly optimistic about the economy after noting the recession was deeper than first though.

AUD/USD jumped to retest the 0.8338 high put in earlier this week and trades not far from that level at writing. A broadly weaker dollar is dragging up commodity prices and fueling interest in commodity currencies which helps further weaken the dollar…and around and around we go. It is interesting to note that stocks have not participated in today’s rebound at all, an oddity, a warning sign or a breakdown in recent correlations; too soon to tell which, I’m afraid.

I’d have more respect for the move if it weren’t taking place on a Friday afternoon which happens to coincide with month-end.

0.8350 barriers are rumored and may help slow the AUD advance near-term.

The month-end dollar slide from hell continues this afternoon and is getting close to some very important chart levels. Case in point: Cable is within 20 pips of its 2009 highs at 1.6744. 1.6750 barriers have been rumored on strength in the past, and I would expect them to still be around. Stops above 1.6750 seem a sure thing as well.

Sentiment has been runing toward fading recent cable strength so I’m sure there is a big short-covering compoenent to the present price action,

I wonder if the boys at the Bank of China left a call level at 1.4300. The EUR/USD continues to soar, now at 1.4280. We could  find out if China retains its selling interest in the 1.4300/50 area very soon.

It is a rarity that a technical pattern works out so well and so quickly, but then again even a blind squirrel finds an acorn every once in a while.

USD/JPY slipped just below the measured move objective at 94.55 from the double top identified earlier on the hourly charts. Better lucky than good…

94.36 is channel support on the dailies in USD/JPY while solid support on the short-term charts resides at 94.00.

EUR/USD has taken out the 61.8% retracement of the 1.4305/1.4005 decline at 1.4189 as well as broken through chart resistance at 1.4095/ Intraday shorts are heading for the exits in droves and having to pay nose-bleed prices in very thin markets. EUR/USD is up to 1.4240 in moon-shot fashion. Do not fade this rally until 1.4300, at least.

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