Yesterday's data, together with the performance of Fed Chairman Jay Powell, led to a decline in the US dollar against a number of world currencies. Also, the euro strengthened, which steadily declined throughout the week against the US dollar.
Basic data
According to the report, sales in the US primary housing market declined in October. The slowdown in sales growth continues to be observed after rising interest rates in the United States this year, which has complicated access to lending.
According to a report by the US Department of Commerce, sales of new homes in October of this year fell by 8.9% to 544,000 homes per year. Economists had expected sales to grow by 4.0%, to 575,000 homes per year. Data for September has been revised. At that time, growth was reported to 597,000 homes per year compared to 591,000 homes per year in August. Compared to the same period of the previous year, sales fell by 12%.
Data on the growth of the American economy also did not lead to a significant strengthening of the US dollar. According to another estimate, in the 3rd quarter of this year, US GDP grew by 3.5% per annum, while economists expected the economy to show an increase of 3.6%. The data only coincided with the expectations of the Ministry of Commerce.
Without a doubt, such good performance will clearly help the Fed to make decisions in the direction of further raising interest rates. However, judging by yesterday's speech by the Fed Chairman, this will clearly not be in a hurry in the committee.
Whether the criticism of US President Donald Trump or a slight deterioration in economic performance in recent years has led to a change in the opinion of the Fed Chairman regarding interest rates.
As Jay Powell said yesterday, the US economy is close to full employment and price stability, but the monetary policy trajectory is not predetermined, and the Fed will closely examine economic data.
If earlier Powell said that the interest rate is "far" from the neutral level, then yesterday said that the rate is only "slightly lower" than the neutral level. This suggests that the pace of tightening monetary policy next year may significantly slow down, and this will adversely affect the US dollar rate. Many experts believe that the increase in interest rates can fully manifest itself in the economy only a year or even later.
The Fed Chairman expressed his point of view about lending. In his opinion, household debt obligations are not likely to be a threat if the economic situation worsens, but there are reasons for concern about the corporate sector debt obligations.
The US dollar continued to lose its position even after US President Donald Trump repeated his statement yesterday about the need to introduce 25% tariffs on imported cars. In his opinion, this ensures national security, as the plans of General Motors Co. on the closure of several North American plants may significantly affect the economy and the market as a whole.
As for the technical picture of the EUR / USD pair, further upward movement may be limited by large resistance levels of 1.1420 and 1.1460. In the case of a downward correction, under current conditions, it will be possible to talk about purchases in the area of large support levels of 1.1340 and 1.1310.
The material has been provided by InstaForex Company -
www.instaforex.com