EUR/USD (a 4-hour chart)
The preliminary GDP for the third quarter showed that US Gross Domestic Product growth accelerated to 2.8%, from 2.5 % in the second quarter while everyone expected a growth to 2 %. The main growth driver was a change in private inventories which added 0.8 % of growth to the GDP. However, Personal Consumption and companies’ investment showed slowing down. Personal Consumption which accounted for 70 % of GDP, rose by 1.5 %, showing a minimal growth from 2011. Goldman Sachs cut its forecast on U.S. GDP growth in the fourth quarter from 2.0% to 1.5%.
The euro fell sharply to almost 8 -week low against the dollar after the ECB unexpectedly cut its key interest rate by 0.25 % to a record low of 0.25%. This decision was predicted by only three of 70 economists surveyed by Bloomberg. European Central Bank governor Mario Draghi expressed his concern during a press conference that low inflation in the currency block will remain for a long time and reaffirmed his previous promise to keep key interest rates at low level.
The pound had showed almost no reaction to the BoE meeting results, which kept the policy unchanged and it almost unchanged by the end of the day. This week, Bank of England governor Carney will present BOE Inflation Report.
The yen fell to a 1.5 - month low against the dollar, but then it rose against the background of a significant drop in the stock markets. The S&P 500 showed the biggest drop in two months.