EUR/USD retained losses after US GDP, initial jobless claims

The euro was still losing ground against the US dollar on Thursday, following the release of the official report on the final value of the US Gross Domestic Product and the weekly report on US initial jobless claims.

EUR/USD fell to a session low at 1.3487 at 12:34 GMT, after which consolidation followed at 1.3495, retreating 0.23% for the day. Support was likely to be found at September 18th low, 1.3338, while resistance was to be encountered at September 23rd high, 1.3544.

It became clear that economy of the United States registered expansion during the second quarter of the year, mostly due to strong performance by the business and governmental sectors, while other key economic spheres slowed down their rate of improvement at the start of the summer period. US final Gross Domestic Product, a major indicator for overall economic activity in the country, rose by an annualized 2.5% in Q2, confirming the revised rate of growth, published last month. Analysts had projected that economy will expand by 2.6%. Business investments increased by 4.7% during the second quarter, exceeding the initially estimated 4.4% rise. However, this increase has been compensated by a slow down of export, as the latter grew at a lesser than projected rate. This GDP results may strengthen concerns that the global economic slow down was causing a negative impact upon US economy, despite recent signs of recovery in Japan and the Euro zone.

In addition, the Department of Labor reported that the number of people who filed for unemployment assistance in the United States, decreased considerably during the week ending on September 21st 2013 and remained close to the lowest recorded level in the past six years. As previously noted, the results during the preceding two weeks were strongly influenced by delays in the computer processing of claims data in Nevada and California. The number of initial jobless claims, an indicator for lay-offs in the country, dropped by 5 000 to 305 000 last week, while previous weeks results experienced a slight revision upwards to 310 000 from 309 000 previously. Experts had anticipated that claims will reach 325 000. The average number of claims during the past four weeks, an indicator considered as lacking seasonal effects, decreased by 7 000 to reach 308 000. This data implied that US employers have gained a new greater dose of confidence that economic recovery was indeed on track, despite the fact that this confidence has not yet appeared in the form of a steadier pace of hiring.

At the same time, US President Barack Obama and congressional Republicans are deadlocked over the federal budget in a dispute which could trigger a government shutdown within days. Republicans are insisting that continued spending after the current budget’s September 30th end date be contingent on reducing the funding of president’s health-care law, while Barack Obama has rejected such a proposal. This confrontation could influence the next set of negotiations over whether to increase the 16.7 trillion USD borrowing limit, which, according to the US Treasury Department, will be reached by October 17th.

Meanwhile, the report on pending home sales out of the United States was to be released within minutes.

Elsewhere, the euro has returned to positive territory against the British pound, as EUR/GBP cross added 0.13% on a daily basis to trade at 0.8424. EUR/JPY pair was gaining even more, 0.32%, to trade at 133.60.