Dollar extends its gains after strong Q3 GDP data

Currencies Direct October 31st 2014 - 2 minute read

Following a surprisingly hawkish FOMC statement on Wednesday 29 October, the dollar consolidated its strength yesterday as good macroeconomic data seemed to prove the FED stance.  The Labour department yesterday released jobless claims figures, which rose by 3,000 to a seasonally adjusted 287,000. Despite the number of Americans filing new claims for jobless benefits rising, it still remains consistent with a recovering labour market. Q3 GDP figures were the real piece of news yesterday as the US economy grew at a 3.5 per cent annual rate in the third quarter. This was better than the 3 per cent expected by Wall Street and helped the Greenback to extend its gains.

In Europe the data was mixed with German inflation unexpectedly slowing to 0.7 per cent, while German unemployment improved strongly. Unemployment decreased by a non-seasonally adjusted 75,000 in October, bringing the total number of unemployed down to 2,733,000. This left the unemployment rate unchanged at 6.7 per cent. Despite a slowing industry, the German labour market is buoyant and the improvement in October is the best improvement since 2011.
In other news, European confidence data showed that the overall economic sentiment index rose from 99.9 to 100.7 beating expectations of a small drop.

Overnight the big story came from Japan, where the Nikkei closed up 4.83 per cent at a seven year high as the Bank of Japan unexpectedly announced it was expanding its monetary easing policy. This was a major move by the Bank of Japan’s governor Haruhiko Kuroda and is widely seen as a reaction to a slowdown in inflation which dropped to 1 per cent in October.

Today the market will focus on European Inflation figures with the Consumer Price Index scheduled for release and German Retail Sales. In the US, the Chicago Purchasing Managers’ Index and Reuters/Michigan Consumer Sentiment Index are both scheduled for release.


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