Euro extends its correction with the USDOllar on recovery.
The Euro (EUR) is trading lower on Friday, pulled down by a little recovery in the US Dollar in a quiet pre-holiday session. The pair retains its overall positive tilt and is on track to end the year with a 3.3% gain, ending a two-year slump. The dovish tilt of the US Federal Reserve (Fed) has spurred a risk rally, sending the US Dollar falling across the board.
Data from the United States revealed on Thursday bolstered the case for a soft landing in Q4.
US data showed that jobless claims were higher than expected, while pending home sales stayed steady in November, despite predictions for a 1% increase.
These results support the hypothesis that the US economy is slowing in the fourth quarter and heading for a soft landing. This enhances the case for Fed rate reduction in 2024 and puts additional downward pressure on the USD.
Spanish consumer prices in the Eurozone have stayed stable at 3.3% year on year. These numbers demonstrate that inflation remains sticky in several countries, supporting the ECB’s hawkish approach and the Euro’s support.
Market movers for the day: The Euro is benefiting from a hawkish ECB and dismal US statistics.
The Euro stays strong, while the US Dollar is near five-month lows. US yields are falling.
The Spanish Consumer Prices Index stayed stable in December, rising at a 3.3% annual rate, unchanged from the previous month.
On Thursday, Austrian Central Bank Governor and ECB member Robert Holzmann stated that there is no assurance of a rate decrease in 2024, providing some support to the Euro.
Weekly jobless claims in the United States grew by 118K in the week ending December 15, exceeding estimates of a 110K report.
Furthermore Pending home sales in the United States were steady in November, despite market estimates of a 1% increase.
With only the Chicago PMI to report today, recent US data supports the soft-landing scenario that is fueling bets on Fed cutbacks in early 2024.
Moreover The futures market is pricing 85%.According to the CME Group FedWatch Tool, the Fed is likely to decrease rates in March and by 150 basis points this year.
