The US dollar shrugged off downward revisions to GDP growth in the US economy to strengthen to three week highs against both the pound and the euro.

The Department of Commerce reported that GDP expanded at an annual rate of 1.8% in the three months to March, below earlier estimates and expectations of 2.4% growth. However the economy did expand from 0.3% growth from the previous quarter.

The US dollar shrugged off downward revisions to GDP growth in the US economy to strengthen to three week highs against both the pound and the euro.

The Department of Commerce reported that GDP expanded at an annual rate of 1.8% in the three months to March, below earlier estimates and expectations of 2.4% growth. However the economy did expand from 0.3% growth from the previous quarter.

It would seem then the better than expected durable goods orders, housing and consumer confidence figures released earlier this week continue to buoy the optimism surrounding the possibility of the Fed tapering their monetary stimulus program.

Continued optimism of tapering US monetary stimulus is also the reason for why the Indian rupee weakened to a record low against both the pound and the US dollar, despite earlier speculation that the Reserve Bank of India had to intervene once again to prevent the rupee weakening further. This is the second time in four days the RBI felt the necessity to intervene in the currency markets, clearly indicating their concern over the recent weakness in the rupee.

The euro weakened following a speech made by Mario Draghi in Paris yesterday. Draghi commented that monetary stimulus will remain accommodative and simulative for the foreseeable future depending on economic conditions adding that an exit from monetary stimulus remains in the “distant”.

As a result we saw a close of the euro against the US dollar below key support levels potentially indicating further falls in the EURUSD rate. Against the pound, the euro remains determined to keep trading relatively range bound but the pound has threatened to break to the upside; with a break above 1.18 indicating potential further gains for the pound.

Currencies of commodity exporting countries caught some relief from the recent sell off by investors after the Peoples Bank of China reassured markets that they will attempt to ease the recent reports of credit squeeze amongst banks in China

Data last night showed that India’s current account deficit narrowed last quarter from 6.7% of GDP to 3.6% of GDP and as a result we have seen the rupee also catch some relief rising by 0.7% against the pound.

This morning we have had mixed data from the euro zone. French consumer confidence has hit an all time low and the unemployment rate in Germany remained at 6.8%; the market was expecting the unemployment rate to increase to 6.9%.

Today is set to be fairly volatile with a deluge of data from the UK, euro zone and the US. Also New York Fed President William C. Dudley and Atlanta Fed President Dennis Lockhart are both speaking today about the outlook over the US economy.

Key Announcements:

9.30am – GBP – Current Account (Q1): The deficit is expected to narrow to -£11.8bn.

9.30am – GBP – GDP (QoQ) (Q1): Expected to remain at 0.3% growth.

10.00am – EUR – Economic Sentiment Indicator (Jun): Expected to improve to 90.3.

10.00am – EUR – Consumer Confidence (Jun): Expected to improve to -18.8.

10.00am – EUR – Industrial Confidence (Jun): Expected to improve to -12.4.

10.00am – EUR – Services Sentiment (Jun): Expected to improve to -8.8.

13.30pm – USD – Initial Jobless Claims: Expected to fall to 345,000.

13.30pm – USD – Personal Spending (May): Expected to grow to 0.3%.

13.30pm – USD – Core PCE Price Index: Expected to improve to 0.1%.

15.00pm – USD – Pending Home Sales: Expected to increase to 1%.

15.00pm – USD – FOMC Member Dudley Speaks