European Session – Dollar dips after durable goods orders, pound regains post-GDP losses
January 28, 2014 2:32 pm
Economic news dominated currency moves today, with UK GDP data being the main driver of sterling while US durable goods orders put a dent in the dollar’s strength.
Early optimism in the pound quickly faded after fourth quarter 2013 GDP data showed that the UK economy grew at a 0.7% rate. While this was in line with forecasts, many would have preferred a stronger pace in order to be able to strengthen the case for the Bank of England to raise rates sooner. It would be interesting to watch BOE Governor Mark Carney’s talk tomorrow in Edinburgh to see if he could shed more light on whether the BOE is leaning towards a rate hike soon.
UK yearly GDP grew at a 1.9% pace, the fastest since 2007 but this was not enough to lift the pound higher than the pre-data high of 1.6624. There was a dip to 1.6534 but a quick recovery ensued to 1.6613, which was accelerated by soft US durable goods data.
The euro turned around after slipping to a 3-day low of 1.3628, to rise to 1.3670 thanks to the weaker dollar after the US data. A report showed durable goods orders fell the most in 5 months in December, coming in at -4.3% versus 1.8% expected and the previous reading was revised to 3.4%.
Prior to the data, the dollar had been gaining ground against most major counterparts, as market focus is shifting to the Federal Reserve policy meeting which concludes on Wednesday with a policy announcement. Expectations are that the Fed will signal it will continue to taper and thus scale back its huge bond-buying programme this year.
The dollar rose to a high of 103.24 versus the yen but slid to a low of 102.61 after the disappointing US data. There will be other US data later in the US session on Conference Board consumer confidence as well as the State of the Union address by President Obama. These will also be key risk events for the dollar ahead of the Fed announcement on Wednesday.
Economic news dominated currency moves today, with UK GDP data being the main driver of sterling while US durable goods orders put a dent in the dollar’s strength.
Early optimism in the pound quickly faded after fourth quarter 2013 GDP data showed that the UK economy grew at a 0.7% rate. While this was in line with forecasts, many would have preferred a stronger pace in order to be able to strengthen the case for the Bank of England to raise rates sooner. It would be interesting to watch BOE Governor Mark Carney’s talk tomorrow in Edinburgh to see if he could shed more light on whether the BOE is leaning towards a rate hike soon.
UK yearly GDP grew at a 1.9% pace, the fastest since 2007 but this was not enough to lift the pound higher than the pre-data high of 1.6624. There was a dip to 1.6534 but a quick recovery ensued to 1.6613, which was accelerated by soft US durable goods data.
The euro turned around after slipping to a 3-day low of 1.3628, to rise to 1.3670 thanks to the weaker dollar after the US data.
A report showed durable goods orders fell the most in 5 months in December, coming in at -4.3% versus 1.8% expected and the previous reading was revised to 3.4%.
Prior to the data, the dollar had been gaining ground against most major counterparts, as market focus is shifting to the Federal Reserve policy meeting which concludes on Wednesday with a policy announcement. Expectations are that the Fed will signal it will continue to taper and thus scale back its huge bond-buying programme this year.
The dollar rose to a high of 103.24 versus the yen but slid to a low of 102.61 after the disappointing US data. There will be other US data later in the US session on Conference Board consumer confidence as well as the State of the Union address by President Obama. These will also be key risk events for the dollar ahead of the Fed announcement on Wednesday.
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