29.08.2008 11:23

FOREX. Thursday summary

The dollar rebounded from the lowest level against the euro this week as the U.S. economy expanded in the second quarter faster than previously estimated and crude oil prices decreased.
The pound dropped to near a record low against the euro and depreciated versus the dollar as house prices in Britain fell this month at the fastest annual pace in almost 20 years. The decline in crude oil pushed Canada's dollar down the most in almost three weeks.
Sterling declined. The average value of a home in the U.K. fell 10.5 percent in August to 164,654 pounds ($301,500), the biggest drop since the final quarter of 1990, Nationwide Building Society said today.
Crude oil for October delivery dropped 3.2 percent to $114.41 a barrel
The Commerce Department reported a 3.3 percent annualized increase in gross domestic product from April through June that was higher than the previous estimate of 1.9 percent. The economy grew at a 0.9 percent pace in the first quarter.
The euro rose yesterday the most against the dollar in almost a week as European Central Bank council member Axel Weber said in an interview in Frankfurt that policy makers may need to raise borrowing costs once the economic outlook ``brightens'' toward the end of the year. Annual inflation of 4 percent in the 15 nations using the euro is twice the ECB's target of just below 2 percent.
``We're still feeling the impact of hawkish comments,'' said Dustin Reid, a senior currency strategist at ABN Amro Bank NV in Chicago.



European data for Friday starts at 0600GMT with German wholesale sales for July. At 0800GMT, ECB Governing Council member Klaus Liebscher holds a final news conference before retiring, in Vienna, at the same time as the release of Italian retail sales for June. There is a raft of Eurozone data for August due at 0900GMT, including the economic sentiment index (seen slipping to 89.2), the business climate indicator and flash HICP, which is expected to come in at 3.9% y/y. The July unemployment rate is due at the same time and is forecast to remain at 7.3%. The Italian preliminary HICP data is also due at the same time.
US data starts at 1230GMT with personal income, expenditures and the PCE core price index for July. Personal income is expected to be

flat in July, as payrolls fell 51,000, the workweek fell to 33.6 hours, and hourly earnings posted a trend 0.3% gain. The stream of stimulus payments should be tapering off in this month's data. PCE is forecast to rise a smaller 0.3% in July, as auto sales were again weak and non-auto retail sales rose only 0.4%. The core price index is forecast to rise 0.3%, the same as in the previous month.

University of Michigan data. The Chicago PMI is expected to fall to a reading of 49.5 in August. Other regional data already released has
suggested continued sluggish growth with some contraction. Meanwhile, the Reuters/University of Michigan Consumer Sentiment Index is expected to be revised upward to 62.0 in August.