Weaker economic data is the reason why the dollar is not benefitting from risk aversion. This morning's jobless claims report has been far from impressive. Claims held steady near 326k, house prices grew at a slower pace, the expansion in the manufacturing sector slowed according to Markit Economics and leading indicators rose 0.1% compared to 1% the previous month. Existing home sales beat expectations but the 0.4% gap between what economists forecasted and the actual report was more than offset by the 1.6% downward revision in November. This contrasts with the strong PMIs from the Eurozone, healthy labor market numbers from the U.K. and stronger than expected consumer spending in Canada. These second tier economic reports do not indicate that the U.S. economy is in trouble but with the Federal Reserve meeting next week, these reports give investors a stronger reason to believe that the central bank could take a break from reducing asset purchases this month.
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GBP/USD retreats to 1.2500 on renewed USD strength
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