Yesterday the Dow Jones index of shares climbed 0.4 percent and closed above 18,000 for the first time ever. The Standard & Poor’s index rose 0.2 percent ending also at a record high. Yesterday revised third-quarter U.S. gross domestic product report blew past expactions to register the fastest pace of growth in 11 years. U.S. economic growth in the third quarter was revised up to 5 percent from 3.9 percent, the largest gain since the third quarter of 2003. Therefore the USD strengthened for a fifth day versus the JPY as consumer spending accelerated to the highest since 2007, which was more than forecasted. Investors see a 68 percent chance the Fed will increase borrowing costs by September. Furthermore yesterday a separate report showed orders for U.S. dureable goods unexpectedly dropped 0.7 percent in the past month, which is the third tumble in four months. In addition household purchases advanced 0.6 percent, the most in three months, after a 0.3 percent climb in October that was larger than estimated. The EUR decreased to a two-year low versus the USD based on turmoil in Greece. Greek Prime Minister Samaras failed to get support among lawmakers for his choice, Stavros Dimas, for president. Attention now turns to the final attempt on December 29. A failure will dissolve parliament and lead to early elections. The EUR/USD decreased 0.5 percent to 1.2172 and the USD/JPY rose 0.5 percent to 120.69. The EUR bought 146.90 JPY.
Yesterday a report showed U.K. current-account deficit widened in the third quarter which lead to a drop of the GBP to a 15-month low versus the USD. Beyond that data also showed economic growth in U.K. was from a year ago revised down to 2.6 percent from 3 percent despite an expansion in the three months through September. The GBP/USD fell 0.5 percent to 1.5511 and the EUR/GBP climbed 0.1 percent to 0.7852.
Read the full report: FX Daily