U.S. 4Q GDP Higher but Misses Target; EUR/USD Dips and Rebounds
January 27th, 7:03 pm by Barbara Zigah
(eToro Blog) The U.S. Bureau of Economic Analysis on behalf of the U.S. Commerce Department reported that the U.S. economy grew 2.8% in the last quarter of 2011, an improvement over the previous quarter’s lackluster growth of 1.8% but falling short of the consensus estimate of 3.0% growth. According to the reading, which was the first of several, it can be primarily attributed to increased consumer spending and higher production from U.S. businesses. Consumer spending rose to 2%, up from 1.7% in the third quarter, but like the GDP data, fell short of analysts’ expectations of 2.4% growth.
Markets as much as expected that the results would come in as they did, especially given the recent release of growth forecasts from the individual Federal Reserve board members who foresee only moderate and modest growth. Indeed, the official statement from the Federal Open Market Committee cautioned that global financial market strains would continue to present significant downside risks. Chairman Bernanke suggested that additional QE might be made available if the recovery appeared to be faltering.
Shortly after the announcement the EUR/USD was trading at 1.3113, but as of this writing resumed its upward momentum and is approaching 1.3138, rising back toward the day’s high of 1.3159. On the OpenBook, trader yeshie turned a profit on his four open shorts, with the most recently closed providing him with a 76% return.
OpenBook guru pyruss is sitting on several long positions which he bought at the dip earlier, one of which is already showing a gain. Guru pyruss believes that the Euro-Dollar will cap 1.3145 at the upside but he will no doubt be watching this rebound closely.
One of OpenBook’s top traders, who prefers not to be considered a Euro bear, may have reconsidered his strategy as he said he would earlier in the week if the 1.30 level held which it clearly has. Yesterday, guru pawelskrzypek took a hit on several shorts that he closed out, and he has since opened several long positions in the pair.
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