Euro rebounds from 1.0801 to 1.0948 on Friday after weak U.S. GDP data: Mar 30, 2015

Market Review - 27/03/2015 21:08 All times in GMT 
 
Euro rebounds from 1.0801 to 1.0948 on Friday after weak U.S. GDP data

U.S. dollar fell against the single currency on Friday after the release of weaker-than-expected U.S. GDP data. Euro rallied from European low at 1.0801 to 1.0949 before retreating to 1.0878 near New York close after Fed Chair Janet Yellen talked about interest rates.

U.S. economic growth cooled in the fourth quarter as previously reported and after-tax corporate profits took a hit from a strong dollar, which could undermine future business spending. The Commerce Department said on Friday in its third estimate of GDP that Gross domestic product expanded at a 2.2 percent annual rate. That was unrevised from the forecast the government published last month.

Fed Chair Janet Yellen in prepared remarks at a monetary policy conference at the Federal Reserve Bank of San Francisco that the U.S. Federal Reserve is giving "serious consideration" to beginning to reduce its accommodative monetary policy and a rate hike may be warranted later this year, although a downturn in core inflation or wage growth could force it to hold off.

Yellen said that after the first rate increase a further, gradual tightening in monetary policy will likely be warranted. If incoming data fails to support the Fed's forecast, the path of policy will be adjusted and "with continued improvement in economic conditions, an increase in the target range for that rate may well be warranted later this year."

Yellen added that "the timing and the path of a Fed hike would depend on the incoming economic data and the actual path of policy will evolve as economic conditions evolve, and policy tightening could speed up, slow down, pause, or even reverse course depending on actual and expected developments in real activity and inflation."

Fed Chair Janet Yellen says productivity growth to pick up from disappointing levels; interesting to see European countries move to negative rates, surprised not more pick up for cash demand Fed must take account in global economic climate and impact on us economic outlook; rising dollar impacting us exports.

The greenback fell briefly to European high at 119.50 to 118.93 in New York morning after the release of weak U.S. durable goods data before moving sideways later in the day. Despite cable's brief drop to 1.4797, the British pound rebounded strongly to 1.4923 after the release of weak U.S. GDP data before retreating.

In other news, U.S. Federal Reserve Vice Chairman Stanley Fischer said on Friday that the non-bank financial sector today is less vulnerable to the type of shocks that played a key role in spreading the U.S. financial crisis.

This week will see the release of New Zealand Westpac consumer survey, German Buba monthly report, U.S. existing home sales and eurozone consumer confidence flash on Monday.

Australian CB leading index, China HSBC manufacturing PMI, German and eurozone Markit manufacturing and services PMI, U.K. CPI, PPI and RPI, U.K. DCLG house price, U.S. core CPI, Redbook, Markit manufacturing PMI and new home sales on Tuesday.

New Zealand trade balance, Swiss UBS consumer indicator, German Ifo business climate, U.S. durable goods and SNB quarterly bulletin on Wednesday.

German GfK consumer sentiment, U.K. retail sales and CBI distributive trades, U.S. jobless claims and Markit services PMI on Thursday.

Japan's household spending, CPI, unemployment rate and retail sales, U.K. Nationwide house price, Germany import price index, U.S. non-farm payrolls, unemployment rate, U.S. final GDP and University of Michigan consumer sentiment index on Friday.