The dollar saw its losses ease quickly dramatically this Friday afternoon, despite a far worse than forecast US Q4 GDP reading.
Though the fourth quarter figure came in at 2.6% at the annualised rate, lower than both the 3.2% seen in Q3 and the 3.0% expected by analysts, the country’s underlying strength, namely in consumer spending and fixed investment, meant that the dollar didn’t take another dive lower following the release.
In fact, combined with Donald Trump’s uncontroversial Davos address, and a recalculation of Steven Mnuchin’s ‘weaker dollar’ comments after the very negative (over)reaction on Wednesday, the greenback actually reduced its losses against the pound from 1% to just 0.2%, while chopping down its decline against the euro to 0.3%, a third of what it was earlier in the session. As the Dow Jones, it just kept doing what it does best – hitting new highs. The Dow jumped 75 points as the bell rang on Wall Street, taking the index above 26470 for the very first time.
The dollar’s mini-turnaround was a huge relief to the UK and Eurozone markets, which have struggled all week with the roided-up showing from their respective currencies. The FTSE rose around 50 points, mitigating a tough week that, at one point, saw the index hit its worst price in 2017 to date. The DAX, meanwhile, climbed back above 13300 with a 0.4% rise, with the CAC the day’s best performer with a 1% surge.
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