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

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.