In its official report, the government confirmed that the US economy expanded by 2.1% in the third quarter. So, the economy maintains a moderate pace of growth during the period due to a strong jobs market. As a reminder, the GDP grew by 2.0% pace in the previous quarter. As such, the data was unrevised and came in line with expectations. Consumer spending is supported by a low unemployment rate, which helps to ease concerns over a possible recession in the United States. In other reports, US core PCE came in at 2.1%, as expected. The prior rate of growth was the same.

The latest economic updated have been mixed but in general, the data confirm that recession fears are really overdone, and the Federal Reserve’s three rate cuts helped to ease the downside pressure on the economy and supported the housing market. As a reminder, during the policy meeting last week, the US central bank left its interest rates unchanged and sent a message to the markets that it won’t change borrowing costs throughout the next year.

The dollar reaction to the release was fairly muted and mixed in general. EURUSD accelerated the decline and registered fresh lows around 1.1085. after a break below the 1.11 handle, market focus is now shifting towards the 100-DMA around 1.1065. should the pair extend losses, this area should serve as a support zone. On the upside, the current selling pressure will ease after a recovery above the 200-DMA around 1.1150. as long as the common currency remains below this level, downside risks prevail.

Meanwhile, USDJPY received a short-term boost but still remains not far from flat levels, oscillating around 109.35, within a tight intraday range limited by 109.25 and 109.40. the persistent failed attempts to break above the 109.70 region suggests the pair may turn lower from the current levels in case risk aversion reemerges in the financial markets. So far, the downside impetus in the pair looks limited as traders continue to express optimism over the phase one trade deal which is expected to be signed by the US and China in January.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.