- US GDP rises 1.3% in Q2 on annual rate; Q1 revised down to only 0.4% from previous 1.8%
- Canadian GDP falls 0.3% in May
- Chicago PMI falls to 58.8 in July from 61.1 in June
- University of Michigan consumer sentiment index final 63.7 in July from 71.5 in June
- House set for vote on revised Boehner plan Friday evening
- Fed’s Bullard: QE3 unlikely
- Fed’s Lockhart: Never says never on QE3 but not now
- IMF: Downside risks dominate Spanish outlook
- US 10-year note yields fall 16 bp to 2.80%, lowest since January
- S&P 500 falls 0.6%
- Gold closes at a record $1623; oil falls $1.50 to $95.95
The dollar plunged virtually across the board early i US trade, reversing overnight strength after bad news in Europe. Headline US GDP was weak but the major shock was the downward revision to Q1 data. Growth was cut to a mere 0.4% from 1.8% previously.
Fears immediately spiked that the Fed would be forced off the monetary sidelines to to administer a fresh dose of monetary tonic to the cramping economy. The dollar dropped to record lows against the CHF in the immediate aftermath of the data against CHF, triggering stops below 77.90 and falling as low as 0.7853. We close at 0.7863.
EUR/USD popped to the upper end of recent ranges, from 1.4245 to 1.4414. We end at 1.4375.
USD/JPY dropped like a stone after the data, eventually working through bids protecting a 77.00 barrier, reaching at 76.89 low. 76.50 and 76.25 barriers are rumored below the market. The 76.25 level was the spike low back in mid-March.
Still no resolution in Washington with a long, hot weekend of negotiations likely in order to stave off the risk of default next week if the debt ceiling is not raised.
