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The greenback rebounded on Wednesday, bolstered by the U.S. Gross Domestic Product for 3rd quarter which showed faster economic growth than previously estimated and warnings by European officials about the euro's recent surge. The U.S. Q3 GDP grew by 2.2% q/q, exceeding economists' forecast of 1.8% growth while the important Q3 PCE only dipped to 2.2% from previous quarter's 2.3% (still above the Fed's 1-2% target range).
The GDP and PCE reports indicate the Federal Reserve can hold off on cutting interest rates for now and higher U.S. rates make U.S. assets and securities more attractive, therefore, increasing the demand for the dollars. Traders did not react to the weaker-than-expected U.S. new home sales for October (1.004 million units vs. the forecast of 1.05 million units) as it was well discounted due to the trend was clearly heading downward since February. The Fed's Beige book economic report, saying labour markets remained tight and most districts reported a declining in single-family home sales, failed to deliver much sparkles as the comments were largely in line with recent U.S. officials' statements.
Earlier in the day, French Prime Minister Dominique de Villepin said the current strength of euro was weighing on competitiveness. French Finance Minister, Thierry Breton also said strong movements in currencies were never good. The comments led to some speculative long-liquidation of European currencies.
As a result, euro and cable retreated from fresh 20-month highs of 1.3218 and 1.9546 to intra-day lows of 1.3130 and 1.9435 respectively. The U.S. unit also rebounded from a 5-month low of 1.2013 against Swiss franc to 1.2118.
The greenback dipped initially to 115.58 versus Japanese yen mainly due to surprisingly strong Japanese industrial production for October (1.6% vs. the forecast of -0.4%). The report raised expectations that Bank of Japan might increase interest rates as early as December. However, the dollar rebounded in the European and U.S. sessions on the back of strong U.S. economic data.
Thursday will see the release of Australian retail sales, Japan's housing starts, Swiss CPI data, German retail sales and employment report, Eurozone and Canada GDP, as well as U.K. Nationwide house price, GFK sentiment survey and CBI distributive trade. Data to be released in U.S. include weekly jobless claims, personal income and spending, monthly PCE data, Chicago PMI and house price index.
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Updating time : 29/11/2006 19:10 GMT
The greenback rebounded on Wednesday, bolstered by the U.S. Gross Domestic Product for 3rd quarter which showed faster economic growth than previously estimated and warnings by European officials about the euro's recent surge. The U.S. Q3 GDP grew by 2.2% q/q, exceeding economists' forecast of 1.8% growth while the important Q3 PCE only dipped to 2.2% from previous quarter's 2.3% (still above the Fed's 1-2% target range).
The GDP and PCE reports indicate the Federal Reserve can hold off on cutting interest rates for now and higher U.S. rates make U.S. assets and securities more attractive, therefore, increasing the demand for the dollars. Traders did not react to the weaker-than-expected U.S. new home sales for October (1.004 million units vs. the forecast of 1.05 million units) as it was well discounted due to the trend was clearly heading downward since February. The Fed's Beige book economic report, saying labour markets remained tight and most districts reported a declining in single-family home sales, failed to deliver much sparkles as the comments were largely in line with recent U.S. officials' statements.
Earlier in the day, French Prime Minister Dominique de Villepin said the current strength of euro was weighing on competitiveness. French Finance Minister, Thierry Breton also said strong movements in currencies were never good. The comments led to some speculative long-liquidation of European currencies.
As a result, euro and cable retreated from fresh 20-month highs of 1.3218 and 1.9546 to intra-day lows of 1.3130 and 1.9435 respectively. The U.S. unit also rebounded from a 5-month low of 1.2013 against Swiss franc to 1.2118.
The greenback dipped initially to 115.58 versus Japanese yen mainly due to surprisingly strong Japanese industrial production for October (1.6% vs. the forecast of -0.4%). The report raised expectations that Bank of Japan might increase interest rates as early as December. However, the dollar rebounded in the European and U.S. sessions on the back of strong U.S. economic data.
Thursday will see the release of Australian retail sales, Japan's housing starts, Swiss CPI data, German retail sales and employment report, Eurozone and Canada GDP, as well as U.K. Nationwide house price, GFK sentiment survey and CBI distributive trade. Data to be released in U.S. include weekly jobless claims, personal income and spending, monthly PCE data, Chicago PMI and house price index.
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