We had busy night of data out from the U.S last night with GDP, Initial Jobless claims and Pending Home Sales to name a few. We also had Crude Oil Inventories and Gasoline Inventories to round off the night.
Let’s start with U.S GDP; analysts were looking for a slight contraction to -0.5% in the measurement for all goods and services produced across the economy, but it came in at -1% annualised, which signalled the first contraction in three years. Beth Ann Bovino, US Chief economist at Standard and Poor’s rating agency, commented that she doesn’t believe it is the start of a new recession and that it does not change her thoughts of an economic recovery albeit at a gradual pace.
The reaction of the U.S Dollar was relatively muted with a light selloff early, but recovered into the end of the session to end the day at 10,505. Initial Jobless claims dropped to 8.3% to 300k for the week ending May 24, according to a Labour Department release. This figure was close to a seven year low, so last night’s data combined with what we have seen in recent weeks indicates that the Labour Market is on track for a steady improvement going forward.
Pending home sales YOY posted a figure of – 9.4%, after being forecast to drop by 8.7%, a the actual figure being disappointing compared the previous months equally disappointing 7.5% fall. Oil inventories increased after an unexpected drop the previous week while Gasoline inventories decreased by 1.8million barrels last week. Market reaction to these figures was a rise of about a dollar a barrel for Oil to close the day at US$103.59 per barrel.
The Aussie dollar continued its recovery against most pairings, with the standout being the Aussie Kiwi cross, with business confidence in New Zealand dropping from 64.8 to 53.5 and Activity Outlook decreasing from 52.5 to 51.
The AUD/NZD broke out of a 5 month range with nearly a 2% rise; the important thing was that it was able to hold onto most of those gains by close of Thursday’s session. That tells us that the potential to extend those gains into Friday’s session are very possible.