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    Eurozone data fails to lift euro as dollar rises despite unimpressive Q2 GDP

    The euro failed to be inspired from positive Eurozone data as all attention was on US GDP estimates for the second quarter. US GDP rose by an annualized rate of 2.3% in the second quarter, falling slightly short of forecasts of 2.6%. The modest figure is an improvement on the first quarter’s upwardly revised 0.6% and supports the case that the US economy is growing at a moderate pace.

    The dollar surged after the data as markets view this as evidence that the US economy is on a sustainable track to meet the Fed’s conditions for normalizing interest rates. The dollar reached a day high of 124.57 against the yen before easing to 124.43. The euro was trading close to its day lows at 1.0921, while the pound was off its peak of 1.5643 against the dollar to trade at 1.5606 in late European session.

    There were further signs of strengthening recovery in the Eurozone as Spanish GDP data for the second quarter came in within estimates of 1%, giving the highest year-on-year rate of 3.1% since 2007. Irish GDP was also robust with quarterly growth of 1.4% in the first quarter.  Outside of the euro area, Swedish growth came in unexpectedly strong at 1% in the second quarter, above estimates of 0.7%. The Swedish krona jumped to 8.65 against the dollar on the data.

    German inflation was slightly weaker-than-expected as flash CPI for July showed annual inflation running at 0.2%, versus estimates of 0.3%. While unemployment showed an unexpected rise of 9,000, versus a fall of 5,000 as expected.

    Eurozone economic sentiment data out earlier in the day only gave a brief lift to the euro. Economic sentiment rose to 104.0 in July from 103.5 in June.

    In other data, US initial jobless claims showed another strong week for US jobs as it came in at 267k, below forecast of 270k, and slightly higher than last week’s 42-year low of 255k.

    Rising oil prices failed to lift the Canadian dollar as the greenback surged above the 1.30 handle to climb to 1.3028. The aussie was also weaker as it touched a new 6-year low of 0.7254.

    Moving to the end of the week, Japanese June CPI figures out on Friday should attract some attention as well as the Eurozone’s flash CPI numbers for July.

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