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EUR/USD Rises amid Slew of US Economic Reports

November 25, 2020 by

EUR/USD rose on Wednesday. There was a huge amount of US macroeconomic reports today as many releases were shifted due to Thanksgiving Day on Thursday. The data did not paint a conclusive picture of the US economy, being mixed. The Federal Open Market Committee released minutes of its latest monetary policy meeting but they did not provide new interesting information.

US GDP rose by 33.1% in Q3 2020 according to the preliminary (second) estimate. The reading was unchanged from the advance estimate and matched market expectations. The US economy contracted by 31.7% in Q2. (Event A on the chart.)

Initial jobless claims rose to 778k last week, seasonally adjusted, up from the previous week’s revised level of 748k (742k before the revision). Analysts were expecting a drop to 732k. (Event A on the chart.)

Durable goods orders rose by 1.3% in October, exceeding the median forecast of a 1.0% increase. The previous month’s gain got a positive revision from 1.9% to 2.1%. (Event A on the chart.)

Michigan Sentiment Index fell to 76.9 in November from 81.8 in October according to the revised estimate. It was in line with market consensus and close the preliminary value of 77.0. (Event B on the chart.)

New home sales were at a seasonally adjusted annual rate of 999k in October, down from 1,002k in September (revised, 959k before the revision). It was still above the level of 972k forecast by economists. (Event B on the chart.)

Personal income decreased by 0.7% in October after rising at the same rate in September (revised down from 0.9%). At the same time, personal spending increased by 0.5%, exceeding the average forecast of a 0.4% increase. The increase in spending in the previous month got a negative revision from 1.4% to 1.2%. Core PCE inflation was at 0.0%, matching expectations, down from 0.2% in the previous month. (Event B on the chart.)

Crude oil inventories decreased by 0.8 million barrels last week after increasing by the same amount the week before. Experts were expecting a small increase of 0.1 million barrels. Nevertheless, the stockpiles remained above the five-year average for this time of year. Total motor gasoline inventories increased by 2.2 million barrels and were also above the five-year average. (Event C on the chart.)

FOMC released minutes of its November monetary policy meeting. (Event D on the chart.) The notes did not provide many insights into the plans of the Committee members. They said that the current size and pace of asset purchases will likely remain at the current level but can be adjusted if necessary:

Participants commented on considerations related to the appropriate pace and composition of asset purchases. Participants generally saw the current pace and composition as effective in fostering accommodative financial conditions. Participants noted that the Committee could provide more accommodation, if appropriate, by increasing the pace of purchases or by shifting its Treasury purchases to those with a longer maturity without increasing the size of its purchases. Alternatively, the Committee could provide more accommodation, if appropriate, by conducting purchases of the same pace and composition over a longer horizon.

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