Hopes that the Federal Reserve might soon start to taper monetary easing received another knock today as consumer spending in the US declined unexpectedly. The 0.2 per cent drop in household purchases in April follows a negatively revised gain of 0.1 per cent in March and surprised economists’ expectations for no change.
The US Dollar Exchange Rate was trading in the region of 1.2988 against the Euro as of 16:30 GMT
This disappointing result follows yesterday’s smaller than expected first quarter growth and demonstrates the risks the economy is facing in the wake of the Federal budget cuts, which began in March.
Household purchases are responsible for almost three quarters of total economic growth.
In response to the news one senior economist observed: ‘We are seeing a slowing. It’s still a decent start to the quarter after a very strong first quarter.’
This report, in conjunction with others released this morning which showed an unexpected decline in German retail sales and a rise in unemployment in the Eurozone, inspired a bout of risk aversion and higher-risk currencies declined as Friday afternoon progressed.
Meanwhile, over in Canada GDP data showed economic expansion of 2.5 percent in the first quarter, beating estimates.
Currency strategist Camilla Sutton said of the news: ‘It’s a great start to the year. Details are strong, exports are strong.’
The key piece of data to watch out for next week is US non-farm payrolls.
US Dollar (USD) Current Exchange Rates
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The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6570 >
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7701 >
The US Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.0420 >
The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 100.4500 <
The US Dollar/Canadian Dollar Exchange Rate is currently in the region of: 1.0308 <
The Pound Sterling/ US Dollar Exchange Rate is currently in the region of: 1.5217 <
The Euro/US Dollar Exchange Rate is currently in the region of: 1.2988 <
The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9595 <
The Canadian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9701 >
The New Zealand Dollar/US Dollar Exchange Rate is currently in the region of: 0.7996 <
(Correct as of 15:00 GMT)
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