Dollar to be at the Forefront of Forex Trading Today
The Dollar is set to be at the forefront of forex trading today. This is after The USD fell against its major counterparts on Thursday, after a string of gains in recent trading sessions. Yesterday's behavior was the results of the confirmation that the U.S. economy returned to growth in the 3rd quarter, boosting investor optimism, leading to the equity market to rally, and curbing the need for the greenback's relative safety.
Economic News
USD - Dollar Slides on Better than Expected U.S. GDP
The USD headed for a 4th monthly drop against the EUR, its longest stretch since 2004, as America's return to growth renewed optimism that a global recovery will quicken, aiding demand for higher-yielding assets. The Dollar weakened as much as 1% to $1.4859 per EUR in the biggest intraday drop since September 8.
The U.S Dollar rose against the EUR in the previous three sessions as evidence of a stalled U.S. economic recovery, including an unexpected decrease in New Home Sales in September reduced demand for riskier assets. The greenback dropped against the EUR for the first time in 5 days, as investors saw data showing the U.S. economy returned to growth in the third quarter. U.S. Gross Domestic Product (GDP) grew at a 3.5% annual rate in the 3rd quarter, after shrinking in the previous four quarters, the U.S. Commerce Department reported.
The solid Gross Domestic Product reading renewed optimism about a global economic recovery, prompting traders to buy higher-yielding currencies, eroding the greenback's safe-haven allure. The U.S Dollar will be under heavy pressure on Friday, as investors may continue selling-off the USD on Thursday's optimistic news. Traders are advised to follow key U.S. releases later today, such as the Chicago PMI and Revised UoM Consumer Sentiment report. These publications will be crucial in determining the USD's key crosses today.
EUR - European Currency Remains in the Uptrend
The EUR traded higher against the U.S Dollar and the JPY after a report showed German unemployment unexpectedly fell in October to 8.1%. The nation's economy, the Euro-Zone's largest, returned to growth in the 2nd quarter. The currency rose for the first time in 4 days to $1.4859 vs. USD compared to $1.4713 late Wednesday.
The EUR was also supported by other economic data. The European Commission's economic sentiment indicator posted a bigger-than-expected October rise. The index for the 16-nation Euro-Zone rose to 86.2 from 82.8 in September, compared to expectations for an increase to 84.5.
The 16-nation currency may rise for the first time in 4 days against the British Pound today on speculation that a German report will show retail sales rebounded in September, adding to signs the recession in the 16- nation region is over.
