Dollar Holds Steady After US GDP Report
The US dollar is held in range against all other major currencies, despite strong GDP data. Canadian dollar is the strongest one. Swiss franc and euro are the weakest ones after uninspiring ECB press conference yesterday. European share were higher today.
The ECB left unchanged all its June assessments and forecasts and did not bring anything new in the outlook for monetary policy. Following the meeting on Thursday, the ECB left the key interest rate at 0%, and the overnight deposit rate at -0.4%. In addition, the European Central Bank confirmed its intention to complete the quantitative easing (QE) program in December, that it will not raise interest rates until the end of next summer.
US GDP grew 4.1% annualized in Q2, much better than prior quarter’s 2.0% but slightly missed expectation of 4.2%. GDP price index rose 3.0%, way above expectation of 2.3%. The growth was highest since Q4 2014. But it’s way off the 5% finalized annual rate in Q3 2014, and can’t even match the 4.6% rate back in Q2 2014.
ECB released the latest Survey of Professional Forecasters (SPF). A survey has revealed that inflation in the Eurozone could accelerate faster than initially thought. The survey showed that headline inflation in the currency bloc was seen at 1.7% this year, above a previous projection of 1.5%, with next year’s rate also rising to 1.7% from 1.6%. By 2023, deemed 'long term' in the survey, the inflation rate is seen accelerating to 1.9%.
The survey also forecasts slower economic growth in the bloc in the near term. The GDP growth projection for 2018 was cut to 2.2% from 2.4%. For next year, it was reduced to 1.9% from 2%. Over the long-term, growth is seen at 1.6%.