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EUR/USD Continues Rally to New Lows

December 23, 2014 by

EUR/USD extended its downward rally today, reaching yet another multi-year low. Positive indicators, including strong economic growth, added to speculations about early monetary tightening from the Federal Reserve. Not every report was good though, and the housing market in particular demonstrated disappointing results.

US GDP grew 5.0% in Q3 2014 according to the third (final) estimate. The actual growth was above the analysts’ predictions of 4.3%, the second estimate of 3.9% and the previous quarter’s growth of 4.6%. (Event A on the chart.)

Durable goods orders fell 0.7% in November instead of rising 3.0% as experts have predicted. Orders were up 0.3% in October. (Event A on the chart.)

Michigan Sentiment Index rose from 88.8 in November to 93.6 in December. The figure was slightly above the specialists’ forecast of 93.5 but below the preliminary reading of 93.8. (Event B on the chart.) The report said:

Consumer confidence reached its most favorable level in the December 2014 survey since the last cyclical peak was set in January 2007.

Richmond Fed manufacturing index rose from 4 in November to 7 in December but was still below market expectations of 8. (Event B on the chart.)

New home sales were at the seasonally adjusted annual rate of 438k in November, missing the value of 461k that most economists were expecting. The October’s reading was revised from 458k to 445k. (Event B on the chart.)

Both personal income and spending grew in November as well as got a positive revision from 0.2% growth to 0.3% for October. Income were up 0.4%, below market expectations of 0.6%. Expenditures increased 0.6%, exceeding the forecast growth of 0.5%. (Event B on the chart.)

Yesterday, a report on existing home sales was released, showing a drop to the seasonally adjusted annual rate of 4.93 million in November from the downwardly-revised 5.25 million in October. This is compared to the median forecast of 5.21 million. (Not shown on the chart.)

EUR/USD for 2014-12-23

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