EUR/USD has started the week with slight gains. Currently, the pair is trading at 1.1402, up 0.28% on the day. There are no eurozone or U.S. indicators, so the markets are likely to be subdued as we head into Christmas.
U.S numbers were a mix on Friday. Final GDP came in at 3.4%, revised slightly from the initial reading of 3.5% in November. This was shy of the estimate of 3.5%, but still points to healthy economic growth in the third quarter. Durable goods reports were well short of their estimates. Core durable goods orders declined 0.3%, short of the estimate of 0.3%. This marked the first decline since May. There was better news from durable goods, which rebounded with a gain of 0.8%, after a plunge of 4.3% a month earlier.
The euro took investors on a roller-coaster ride late last week. EUR/USD climbed on Thursday, as the markets responded with a thumbs-down to the Federal Reserve’s rate statement. The statement was less dovish than the markets wanted, as policymakers said they would continue to adhere to their policy of gradual increases. Investors were looking for a Christmas gift from the Fed, in the form of a dovish rate statement. There was speculation that the Fed would “compensate” investors for the rate hike, given that the markets have been in turmoil for weeks and the U.S. economy appears to be cooling down.
However, the Fed was not in a giving mood, signaling that it plans to continue raising rates in 2019. Policymakers did not remove the phrase “further gradual increases” from their statement, and Fed Chair Jerome Powell added that the “lower end” of the neutral rate range has been achieved.
