Dollar Slightly Weaker After Q4 GDP Unrevised
28 March 2015 - 6:36AM
RTTF2
The dollar is down slightly against all of its major competitors
at the end of the trading week. Fourth quarter GDP came in weaker
than anticipated this morning. The result came in unrevised, while
economists were expecting an upward revision. However, consumer
sentiment came in better than expected.
Trading has been a bit subdued Friday, as investors await a
speech from Federal Reserve Chair Janet Yellen later this
afternoon. Yellen will be giving a speech on monetary policy at the
San Francisco Fed conference.
Economic activity in the U.S. grew at an unrevised rate in the
fourth quarter of 2014, according to the final estimate released by
the Commerce Department on Friday. The report said gross domestic
product increased by 2.2 percent in the fourth quarter, unchanged
from the growth estimated last month.
Economists had been expecting the pace of GDP growth to be
upwardly revised to 2.4 percent, which would still reflect a
notable slowdown from the 5.0 percent growth seen in the third
quarter.
Consumer sentiment in the U.S. deteriorated by less than
previously estimated in the month of March, according to a report
released by the University of Michigan on Friday. The report showed
that the final reading on the consumer sentiment index for March
came in at 93.0 compared to the mid-month reading of 91.2.
The final reading came in above economist estimates for 92.1 but
was still below the final February reading of 95.4.
Bundesbank President Jens Weidmann said on Friday that a
European solution may be required for the regulatory treatment of
sovereign debt, if the ongoing discussions by the Basel Committee
fail to produce an agreement.
"In contrast to other jurisdictions, the Eurosystem is for good
reasons forbidden to act as lender of last resort for governments,"
Weidmann said at a conference in Frankfurt. "The risk profile of
euro-area sovereign debt is therefore different."
Pointing to the need to end the preferential treatment of
sovereign debt, Weidmann said sovereign debt is not risk-free and
must be backed by capital. Further, he said the "exposure to a
single sovereign must be capped, just as is the case for any
private debtor."
The dollar rose to a 4-session high of $1.0801 against the Euro
early Friday, but has since pulled back to around $1.09.
Germany's import prices declined at a slower-than-expected pace
in February, figures from Destatis showed Friday. The import price
index fell 3.0 percent year-over-year in February, below
economists' expectations for a 3.9 percent decrease.
At the same time, export price index climbed at a faster pace of
0.7 percent annually in February, following a 0.4 percent rise in
the prior month. It was the sixth successive monthly increase.
French consumer confidence improved as expected to the highest
level since 2010, survey data from the statistical office Insee
showed Friday. The households' consumer confidence index came in at
93 in March versus 92 in February. This was the highest score since
November 2010 and came in line with expectations.
The likelihood of a broad and protracted deflation, afflicting
wages and prices, is pretty low, Bank of England Deputy Governor
Ben Broadbent said Friday.
"There is a risk that falling prices will beget yet weaker or
even negative wage growth - that today's "good" deflation will
metastasise into something a good deal worse," Broadbent said at
Imperial College Business School, London.
Broadbent said headline inflation will get a sizeable kick
upwards, once the falls in food and energy prices drop out of the
annual comparison.
The buck climbed to a 1-week high of $1.4796 against the pound
sterling Friday morning, but has since retreated to around
$1.4875.
U.K. house price growth softened for the seventh consecutive
month to an 18-month low in March, the Nationwide Building Society
reported Friday.
House prices advanced 5.1 percent year-on-year in March, slower
than February's 5.7 percent increase and a 5.3 percent rise
forecast by economists. This was the slowest rate of growth since
September 2013.
However, house prices rose 0.1 percent on a monthly basis
offsetting a 0.1 percent drop seen in February. Economists had
forecast a steeper 0.2 percent rise for March.
The greenback slipped to a low of Y118.926 against the Japanese
Yen Friday, from an early high of Y119.940. The U.S. currency is
currently trading around Y119.125.
Overall consumer prices in Japan gained 2.2 percent on year in
February, the Ministry of Communications and Internal Affairs said
on Friday, which was below forecasts for 2.3 percent and down from
2.4 percent in January.
Core CPI, which excludes the volatile prices of food, added an
annual 2.0 percent. That was also shy of expectations for 2.1
percent and down from 2.2 percent in the previous month.