A disappointing day for Trump as GDP growth is revised downwards
The New Zealand dollar declined after weak economic data from the country. In April, the building approvals declined by -4.7%, which was below the expected gain of 0.1%. The building capital expenditure in the first quarter declined by -2.8% while the machinery and plant CAPEX declined by -0.5% after gaining by 0.7% in the fourth quarter. Private house approvals declined by -2.6%. Meanwhile, the country released the annual budget, which focused on bridging the gap between the poor and rich. It will also address other social issues like mental health.
The euro was little moved today as the market started to focus on tensions between the US and Europe. Ten months after Trump made a truce with Jean-Claude Juncker, little has been done. In the US, Trump is facing pressure on how to address Chinese tensions. He is also focused on a likely trade deal with the Japanese. In Europe, Germany and France are also having divisive talks. France has insisted that any deal with the US will not have agriculture goods. Germany, which exported cars worth more than 22 billion euros to the United States last year believes that agriculture must be on the deal. In the US, Chuck Grassley, who chairs the finance committee in the Senate has said that the deal must include agriculture.
It was a disappointing day for Donald Trump as the US released weak economic numbers. The second reading of the first quarter GDP showed that the economy expanded by 3.1%. This was along with the expectations but lower than the previously-released 3.2%. Corporate profits in the quarter declined by -3.5%, which was lower than the expected 2% and the fourth quarter’s 3.2%. The GDP price index rose by just 0.5% in the quarter, which was lower than the expected 0.5%. The trade deficit continued to widen in the quarter, rising to $72.12 billion. On a positive side, the real consumer spending rose by 1.3% while the initial jobless claims rose by 215K.
After rising initially, the NZD/USD pair declined in the afternoon session to a low of 0.6515. On the hourly chart below, the current price is below the 50-day and 25-day moving averages. It is also along the important support trendline shown below. The MACD has emerged from the lowest level this month and has turned positive. There is a likelihood that the pair will test the important support level of 0.6500.
The EUR/GBP pair was relatively unmoved today and is trading at 0.8817. This is close to the highest level this week. On the daily chart below, the price is between the 50% and 61.8% Fibonacci Retracement levels. The price is also above the 50-day and 25-day moving averages. It is also trading along the upper line of the Bollinger Bands. While the pair appears to have paused, there is a likelihood that it will continue the upward trend to at least test the 61.8% Fibonacci level of 0.8857.
The EUR/USD pair was relatively unmoved after the US economic data. The pair is trading at 1.1137, which is in the same level as yesterday’s close. On the hourly chart, this price is close to the 23.6% Fibonacci Retracement level. As a result of the short-term consolidation, the Bollinger Bands are all trading close to the current price. At this point, the pair will likely move in either direction. If it moves higher, it ia likely to test the 38.2% Fibonacci Retracement level.