Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Euro Has Best Day In 5 Months, While U.S. GDP Overshadows ECB

By Kathy LienForexOct 28, 2021 04:10PM ET
www.investing.com/analysis/euro-has-best-day-in-5-months-while-us-gdp-overshadows-ecb-200606693
Euro Has Best Day In 5 Months, While U.S. GDP Overshadows ECB
By Kathy Lien   |  Oct 28, 2021 04:10PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
EUR/USD logged its best day in five months as U.S. GDP overshadowed the European Central Bank’s monetary policy announcement. According to the latest report, the U.S. economy grew by only 2% in the third quarter, which was the weakest pace of growth since the pandemic-induced global shutdown in the second quarter of 2020. That was when the GDP dropped a staggering 31.2%. Economists were looking for GDP growth of 2.8%, which is a significant slowdown from last quarter’s pace, but 2% misses all of the marks. Business investment, government spending and trade contributed to the decline, but consumer spending had the most significant impact on growth. Supply-chain disruptions hampered product availability, while concerns about the Delta variant reduced activity in restaurants, factories and stores. With the market fully pricing in taper by the Federal Reserve, today’s GDP report confirms that Chairman Jerome Powell will most likely downplay rate hikes next week. Earlier this month, he said point blank: “I do think it's time to taper, and I don’t think it's time to raise rates.” We firmly expect the Fed chair to repeat this line at next week’s FOMC meeting. The U.S. dollar sold off across the board in the New York session.
 
The euro was the biggest beneficiary of U.S. dollar weakness, and the lack of demand for the greenback was the only reason for the currency’s rise. The ECB left monetary policy unchanged, but unlike its global counterparts, it is less worried about inflation. According to ECB President Christine Lagarde, “We did a lot of soul searching to test our analysis and we are confident” that the surge in inflation will prove temporary. She added, though, “it will take a bit longer than expected.” 
 
Lagarde also pushed back on the market’s expectations for an interest rate increase next year, saying, “Our analysis certainty does not support that the conditions of our forward guidance are satisfied at the time of liftoff as expected by markets, nor any time soon thereafter." 
 
Unlike many other central banks that have reduced stimulus, ending their quantitative easing programs or raising interest rates, the ECB is making it very clear that it is looking the other way on inflation. This should have driven the euro lower, but the single currency has been underperforming in recent weeks and the sell-off in the U.S. dollar today triggered a massive short squeeze in EUR/USD.   
 
Friday is another busy day in the markets, with third quarter GDP and October CPI numbers due from the Eurozone. The U.S. releases the Fed’s favorite inflation measure, the PCE deflator along with personal income and spending. With such important releases on the docket, traders should expect more volatility in the single currency. The Australian and Canadian dollars will also be in focus, with Australian retail sales and Canadian GDP numbers due for release. Despite the Bank of Canada’s hawkish announcement on Wednesday, the Canadian dollar was the laggard today. Its gains against the greenback paled in comparison to other major currencies, like AUD, NZD, EUR and GBP.
Euro Has Best Day In 5 Months, While U.S. GDP Overshadows ECB
 

Related Articles

Scott Barkley
GBP/AUD Looks To Move Lower By Scott Barkley - Jan 18, 2022

GBP/AUD is currently going up at the time of this post. We are now at 1.8913 and have convergence in play. We are looking for an initial move to the average true range target near...

Euro Has Best Day In 5 Months, While U.S. GDP Overshadows ECB

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (8)
isah Rabiu
isah Rabiu Oct 29, 2021 2:40AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
isah Rabiu whan help for loans
hussen mohammed
hussen mohammed Oct 28, 2021 6:01PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
hussen mohammed
أبو عرب
أبو عرب Oct 28, 2021 5:58PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks Joe..
Dennis Stringer
Dennis Stringer Oct 28, 2021 5:43PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks Joe.
Dennis Stringer
Dennis Stringer Oct 28, 2021 5:43PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thanks Joe. :(
Dennis Stringer
Dennis Stringer Oct 28, 2021 5:42PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
thanks Joe😴
patricio Silva
patricio Silva Oct 28, 2021 4:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Luv bould
Ali Farhani
Ali Farhani Oct 28, 2021 4:32PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Hallo
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email