USD reluctant to move higher despite positive GDP

United States Dollar:

GBP/USD - Having dropped to an overnight low of 1.5970, following the end of quantitative easing in the US, sterling spent yesterday morning recovering ground ahead of the release of US GDP and jobless claims numbers. Annualised US Q3 GDP came in at 3.5%, beating forecast by 0.5%, but initial/continuing jobless claims and personal consumption all disappointed. Initial jobless claims printed 287K vs 283K exp, continuing jobless claims posted 2.384M vs 2.350M exp and personal consumption expenditures prices fell to 1.2% vs 1.3% exp. This mix of news saw GBP/USD fall initially to 1.5980 but quickly turnaround and rise to just below 1.6040. Overnight the pair staged another turnaround, hitting lows of 1.5967. With no UK data, today's movements will again be reliant on the US for direction. This afternoon sees the US post its personal income, personal spending, Chicago purchasing managers index and Reuters/Michigan consumer sentiment index. We open today with GBP/USD at 1.5985.

Euro:

GBP/EUR experienced another relatively quiet day of trading yesterday. The morning’s German unemployment numbers held at 6.7%, while the unemployment change fell by 22K. Europe's largest economy then posted their inflation figures for Oct. YoY CPI came in at 0.8% vs 0.9% exp, MoM CPI printed -0.3% vs -0.1% exp and the YoY harmonised index posted 0.7% vs 0.9% exp. This did little for sterling, with the pair moving below 1.27 through the end of European trading. This morning, markets opened to the news that MoM German retail sales fell by 4.7% from the previous month to -3.2%, sending GBP/EUR higher. It now looks towards eurozone unemployment rate and CPI data, due in a short while. We open today with GBP/EUR at 1.2730. The euro spent much of yesterday regaining some ground against its US counterpart following the disappointing jobless claims and personal consumption data from America. Starting the day at 1.2575, the pair rose to just below 1.2630 by the end of the European sessions. This morning’s weaker than expected German Retail sales figures have sent it tumbling, however. Today's dockets are quite full for both sides, as markets await the big news of eurozone CPI and eurozone unemployment rate plus this afternoon’s US personal income/spending, Chicago purchasing managers index and Reuters/Michigan consumer sentiment index. We open today with EUR/USD at 1.2555.

Aussie and Kiwi Dollars:

AUD and USD moved higher overnight as the greenback failed to advance despite better than expected US GDP numbers. At present, AUD/USD and NZD/USD trade at 0.8810 and 0.7850 respectively. With the week’s two major risk events from the US behind us, it is likely to be a relatively quiet end to the week for the commodity linked currencies. Saying that, this afternoon’s second tier data string from the US (combined with overnight Chinese Manufacturing PMI) could fuel some further volatility. We open with GBP/AUD at 1.8140 and GBP/NZD at 2.0370.

Data releases for the next 24 hours:

AUD: No Data

EUR: Eurozone CPI (Oct), Unemployment rate (Sep)

GBP: No Data

NZD: No Data

USD: Employment cost index (Q3), Personal Income (MoM) (Sep), Personal Consumption Expenditure Price Index (YoY & MoM) (Sep), Personal Spending (Sep), Chicago Purchasing Mangers' Index (Oct), Reuters/Michigan Consumer Sentiment Index (Oct)