The US Dollar (USD) exchange rate gave up earlier gains against the Pound (GBP) and other major peers after demand for riskier higher yielding currencies such as the Australian Dollar increased on the back of positive US third quarter growth data.
Earlier in the session, the US Dollar hit a three and a half week high against a basket of currencies after the better than forecast growth data buoyed demand for the currency. As the session progressed, the US Dollar softened as economists saw the data as a sign that fears over the global economy have been overdone, reducing demand for the safe haven ‘Buck’.
According to the Washington based Commerce Department, the USA economy expanded at an annual rate of 3.5% in the three months ending in September, a slowdown from the 4.6% increase seen in the second quarter but was better than the 3% increase forecast by economists. The economy was finding support from strengthening exports and increased business investment.
The hawkish policy statement by the Federal Reserve and its decision to end its monthly quantitative easing programme had buoyed the ‘Greenback’ and is likely to continue to support the currency until the end of the week.
A separate report showed that the number of American citizens filing for new unemployment benefits rose for a second straight week last week. The data had little impact however, as economists believe that recent trends are continuing to support a recovery in the nation’s labour market. The Labour Department said initial jobless claims rose 3,000 to a seasonally adjusted 287,000.
Taken as a four-month average the jobless claims figures show that fewer Americans applied for unemployment benefits over the past month than at any time in over 14 years, adding to signs that the labour sector is continuing to improve.
Against the Euro the US Dollar strengthened after the single currency was weakened by data which showed that German Consumer Price inflation accelerated at an annual pace of 0.8% in October, a figure unchanged from the previous month and worse than the 0.9% figure forecast by economists. On a monthly basis German CPI declined to -0.3%, worse than the -0.1% expected adding to deflationary fears.
A separate report showed that the annual rate of inflation in Spain remained below zero this month, falling 0.1% after declining 0.2% in September.
The US Dollar could find more support on Friday from the latest PCE Price Index, Chicago PMI and Reuters Michigan Consumer Sentiment data.
UPDATE
The US Dollar to Pound Sterling exchange rate is currently trending in the region of 0.6256.
British economic data has printed reasonably negatively on Friday which has seen the Pound soften against many of its major peers. The Consumer Confidence Survey was expected to equal the previous figure of -1, but the actual result dropped to -2.
The US Dollar is holding relatively steadily against many of its most traded currency peers. USD/GBP volatility is likely to occur with the publication of US data later on Friday afternoon.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.6240 ,
US Dollar,,Euro,0.7924 ,
US Dollar,,Canadian Dollar,1.1183 ,
US Dollar,,Australian Dollar,1.1336 ,
Pound Sterling,,US Dollar,1.6021 ,
Euro,,US Dollar,1.2618 ,
[/table]
