The euro fell against the greenback yesterday following reports of a higher-than-anticipated Spanish unemployment rate at the end of the December quarter. The euro’s sell-off was also mainly fueled by better-than-anticipated US fourth-quarter GDP growth data, lower-than-anticipated unemployment claims, and robust durable goods data. Overall, the EUR/USD declined from a high of 1.0930 to a low of 1.0870 in the past 24 hours.
According to the National Statistics Institute of Spain, the country’s unemployment rate inched higher to 12.90% in the December 2022 quarter, from 12.70% in the September 2022 quarter, which disappointed economists who were expecting a slight decline in the rate.
According to the advance estimates provided by the US Bureau of Economic Analysis, the country’s economy expanded 2.90% q-o-q in the December 2022 quarter, following GDP growth of 3.20% in the September 2022 quarter and greater than the 2.60% increase forecast by economists.
On an annual basis, the current-dollar GDP rose by 6.50% (or $408.60 billion) in 4Q22 to $26.13 trillion. In the third quarter, the economy grew by 7.70% (or $475.40 billion).
The US GDP expanded by 9.20% (or $2.15 trillion) to $25.46 trillion in 2022, compared with a rise of 10.70% (or $2.25 trillion) in 2021. Personal savings were $552.9 billion in Q4 2022, an increase from $507.7 billion in Q3 2022.
The Census Bureau stated that US durable goods orders jumped 5.60% m-o-m in December, following a decline of 2.10% in the prior month and more than double the 2.40% growth anticipated by economists.
The reported figure reflects the sharpest rise since July 2020. The increase was led by a 16.70% (or $15.50 billion) rise in the transportation sector to $108.10 billion.
Devoid of transportation, fresh orders fell by 0.10% in December. Barring defense, fresh orders rose by 6.30%. Also, orders for non-defense capital goods, devoid of aircraft, decreased by 0.20% m-o-m in December and met the market’s projections.
According to the US Department of Labor, the country’s first-time unemployment claims fell to 186,000 in the week ended January 21 from 192,000 (upwardly amended from 190,000) in the earlier week. Economists had anticipated a rise in the number of jobless claims to 203,000.
The four-week moving average declined to 197,500 from 206,750 (upwardly revised from 206,000) in the previous week.
The US Census Bureau has stated that the country’s goods trade deficit widened to $90.30 billion in December from $82.90 billion in November. The reported figure was higher than forecasts of an $88.40 billion deficit. Exports were $166.80 billion in December, a decrease of $2.60 billion from November. Likewise, imports stood at $257.10 billion, an increase of $4.70 billion from November.
As per the data published by the US Census Bureau, the country’s preliminary wholesale inventories inched up 0.10%m-o-m in December to $934.10 billion, following a 0.90% rise in the previous month. The reported figure was better than the 0.50% rise anticipated by economists.
On a y-o-y basis, US wholesale inventories surged 17.80% in December 2022.
Retail inventories were $742.20 billion in December, an increase of 0.50% m-o-m in December after remaining unchanged in the previous month. On a y-o-y basis, retail inventories rose by 13.90% in December 2022.
The upbeat GDP, unemployment claims, and durable goods orders data are expected to keep the US dollar bullish against the euro for the next few trading sessions.
The historical price chart indicates that the EUR/USD pair is declining after facing resistance at 1.0930. The next support is anticipated only near 1.0805. Additionally, the MACD indicator is showing a negative reading. Therefore, we anticipate the currency pair to remain in a downtrend in the days ahead.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
