Annualised US GDP Rises as Forecast, Personal Consumption Drops
Despite Personal Consumption unexpectedly falling from 3.2% to 3.0%, the latest round of data releases for the US have been positive. Core Personal Consumption, which doesn’t include volatile food or energy prices, remains level at 1.3%, while annualised GDP rose from 1.5% to 2.1%. The Gross Domestic Price Index for Q3 rose to 1.3%, while the Advance Goods Trade Balance deficit fell from $59.147 billion to $58.411 billion.
The ‘Buck’ has been unable to make significant gains against the Euro, which is strengthened by a series of positive data releases from Germany and the Eurozone, showing a faster rate of growth than expected and heightened optimism in German business conditions.
The EUR/USD exchange rate is currently experiencing little movement and is trading in the region of 1.0628.
The Euro (EUR) and US Dollar (USD) are both bouncing back from weak patches today and as a result the EUR/USD exchange rate is trending narrowly, with the ‘Buck’ (USD) slowly advancing on the Euro.
EUR/USD Exchange Rate: Euro Strengthened by Quickest Rate of Eurozone Growth in Over Four Years
After several days spent sliding against major currencies following a turbulent few weeks, the Euro is finally on the uptick as the Markit PMIs for Germany and the Eurozone print positively. Data shows that France has suffered in the wake of the Paris attacks, but the rest of the Eurozone is growing at the fastest pace in 54 months.
The Markit/BME Composite Index for Germany rose from 54.5 to 55.6, instead of a slight decline as predicted, while the Eurozone Composite Index accelerated to 54.4. The index measures the speed of economic growth: a score of 50 represents no growth at all. The higher above 50 the scores, the quicker the economy is growing.
Despite an accelerated pace of growth, the European Central Bank (ECB) is still likely to continue with its plans to increase monetary stimulus. The ECB could choose one of three options to attempt to boost Eurozone growth: increase the amount of monthly purchases from €60 billion, continue purchasing assets after the original end-date in September 2016, or buy debt that has a longer maturity.
The EUR/USD exchange rate is currently trading in the region of 1.0640.
USD/EUR Exchange Rate: US Dollar on the Rise Despite Poor Manufacturing PMI
The ‘Buck’ began today’s European session trending up against the major currencies, but the release of US data mid-afternoon has slowed the US Dollar’s advance. The Markit US Manufacturing PMI fell from 54.1 to 52.6, showing that growth in the sector has declined to a two-year low.
The data shows the affect a strong US Dollar has had on the manufacturing sector, with overseas orders slowing and manufacturers therefore reluctant to hire. While this represents a small realisation of the fears that an overvalued ‘Greenback’ (USD) could harm the economy, Markit chief economist Chris Williamson believes that the figures will have little impact upon the Federal Reserve.
‘With the survey continuing to show modest growth, and any weakness linked to the global economy rather than a deterioration in domestic demand, there seems little in the survey results to throw up any roadblocks to a Fed that seems intent on hiking interest rates in December,’ he claims.
Month-on-Month (MoM) Existing Home Sales have also fallen, from -4.7% past the forecast -2.7% mark to -3.4%.
The USD/EUR exchange rate is currently trending between 0.9384 and 0.9431.
EUR/USD Exchange Rate Forecast: More Key Data Will See Volatile Week Ahead
Tomorrow sees a glut of data for both the US and the Eurozone, with further US data due out on Wednesday. The US data is likely to have more of an impact, with GDP and Personal Consumption figures, as well as the Consumer Confidence index all released tomorrow afternoon.
The US Dollar could be pushed further up today after the announcement of an unscheduled meeting by the Federal Open Market Committee (FOMC) which will discuss the advance and discount rates used by Federal Reserve Banks. A decision to raise rates here could suggest the Fed is also considering raising benchmark interest rates in December, which is sure to cause further gains for the ‘Buck’.
The EUR/USD exchange rate is currently trending down between 1.0599 and 1.0657.