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US Dollar Weakens vs. Euro on Some Poor Macro Reports

December 23, 2020 (Last updated on January 7, 2021) by

Lackluster PCE inflation and spending reports caused EUR/USD to rally during the early US Forex trading session today. The currency pair then retreated to its session’s average level as more reports were released in the United States.

Personal income decreased by 1.1% in November after falling by 0.6% in October (revised from a -0.7% change); only a small drop by 0.3% had been expected. Personal spending decreased by 0.4%, which was faster than the median forecast suggested (a 0.2% drop). The spending rose by 0.3% a month earlier. Core PCE inflation continued to remain unchanged 0.0%, while a small increase (0.1%) had been expected. (Event A on the chart.)

Durable goods orders rose by 0.9% in November, better than the median forecast of a 0.6% increase, but significantly slower than 1.8% reported for the month of October (revised positively from 1.3%). (Event A on the chart.)

Initial jobless claims came out at 803k for the last week, up from the preceding week’s revised level of 892k. The reading was now quite below the median forecast’s value of 882k. (Event A on the chart.)

New home sales turned out to be a massive disappointment, showing seasonally adjusted annual rate of 841k for November, down from 945k of October (revised from 999k). It was much worse than the rate of 994k forecast by analysts. (Event B on the chart.)

Michigan Sentiment Index final value for December came out at 80.7 (revised down from 81.4), but still above the November’s value of 76.9. The forecast had been for the final value to drop a bit less — just to 81.0. (Event B on the chart.)

Crude oil inventories decreased by 0.6 million barrels last week, significantly less than the median forecast suggested (a decline by 2.9 million barrels); the previous week’s decline had been by 3.1 million barrels. Total motor gasoline inventories fell by 1.1 million barrels. (Event C on the chart.)


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