EUR/USD in steady trade ahead of US GDP report

The euro was trading steadily against the US dollar on Thursday, as markets awaited the report on the final value of US Gross Domestic Product, while uncertainty over the future of Federal Reserves stimulus program continued.

EUR/USD slipped to a session low at 1.3510 at 2:20 GMT, after which consolidation followed at 1.3517, dipping 0.07% for the day. Support was likely to be received at September 25th low, 1.3463, while resistance was to be met at September 19th high and also a seven-month high, 1.3568.

Today investors’ attention will be focused on the report on the final value of US Gross Domestic Product, as median estimates pointed an expansion by 2.6% on annual basis during the second quarter. According to previous estimate, US economy expanded by annualized 2.5%. Another anticipated report will show the weekly performance of initial jobless claims in the country, as projections pointed an increase to 325 000 from 309 000 during the preceding week. The last crucial report out of the United States today encompasses the pending home sales, as they provide a signal for the future housing market activity. The median estimate pointed a 1.0% drop in August compared to July, after sales fell 1.3% in July. An upward revision of the GDP, lesser than expected number of claims and better than forecast sales results will certainly provide support to the US dollar.

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, Bloomberg imparted. 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. 59% of respondents in a survey said that the federal budget deficit was growing, while only 10 percent said it was shrinking and according to another 25%, it was remaining unchanged. During the second quarter ending on June 30th, the deficit figure contracted to 4.3% of the US Gross Domestic Product, according to the Treasury Department. Long-term debt, however, continued to amass, reaching 73% of the annual economic output in 2013 and projected to probably reach 100% of the GDP figure by 2038, according to a report released by the nonpartisan Congressional Budget Office on September 17th. The above mentioned 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 euro received little support after the upbeat German consumer confidence yesterday. According to data by Gfk, the index of German consumer confidence rose to 7.1 in October, marking its highest value since September 2007, from a reading of 6.9 in the preceding month, while expectations pointed an increase to 7.0.

In addition, today it became clear that consumers in France were a bit more optimistic about their future financial prospects, according to a survey in September. The index of consumer confidence climbed to a reading of 85 in September from 84 in August, but yet, it still remained below the long-term average value of 100. Consumers expressed a bit greater optimism also regarding the unemployment rate in France in the future. However, expectations of consumers ability to save money and to spend more have been reduced.

Elsewhere, the euro was slightly lower against the pound, with EUR/GBP cross down by 0.11% for the day to trade at 0.8404 at 7:55 GMT. EUR/JPY pair, on the other hand, was gaining 0.42% to trade at 133.73 at 7:56 GMT.