​​​​​US GDP and jobless data brings further dollar downside

Dollar likely to continue decline, as US GDP and jobless figures highlight both past and present weakness in the economic picture.

US GDP compounded by jobless claims

US GDP for Q2 was always expected to be pretty shocking, with markets estimating a figure around -34.1%. While the eventual release managed to outperform those forecasts, the figure of -32.9% still points towards a huge contraction over those three months.

However, aside from the headline release, we have seen more worrying signs for the US recovery after the release of jobless claims for the week ending 25 July. For investors, Q2 growth can be excused as backward-looking data, while the recent jobless figures are a reflection of how this post-lockdown recovery is taking shape. Firstly, the initial jobless claims figure followed up last weeks rise with a second consecutive upward move. Perhaps more worrying is that this rise in initial claims is finally having an impact on the continuing claims figure, which rose for the first time since May.

Dollar declines likely to continue

The dollar has been hit hard of late, with the dollar index falling into a two-year low this week. With the FOMC providing a highly accommodative stance, and questions over a second-wave fueled economic slowdown, there are plenty of questions for the greenback. The four-hour chart below highlights the downtrend in play here, with the dollar heading once again in response to today's data. The creation of lower highs on an intraday basis remains key here, with a bearish outlook in play until that occurs. With that in mind, further downside looks likely from here, with a break through the 93.97 level required to bring about an end to this current outlook.

Related articles

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Sell
Buy
-
-
China 300
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Monday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.