Home Business News US economic growth slowdown

Euro fell on Wednesday against the US dollar by 0.18% after 1:45 pm GMT, after suffering greater losses during the day’s session, bringing it to its lowest levels in a week at the level of 1.07967.

While the unexpected slowdown in domestic product growth in the US in the fourth quarter, in addition to the larger than expected trade balance deficit in January, helped support the euro slightly to reduce its losses today.

The growth of the US economy slowed to 3.2% during the fourth quarter compared to what it was in the previous quarter, according to preliminary data, which was lower than expected at 3.3% and lower than the growth in the third quarter at 4.9%. The trade deficit in goods also rose and reached $90 billion in January, exceeding expectations of $88 billion.

However, Wednesday’s data does not seem to have helped support expectations of an interest rate cut next May, with the higher-than-expected growth in consumer spending, one of the most important drivers of inflation, at 3%.

While the probability of the Fed cutting interest rates by 25 basis points in May is still only about 17%, after it was 16% yesterday.

Now, the focus turns to the reading of the Core Personal Consumer Expenditure (Core PCE) price index, the Fed’s preferred gauge for tracking inflation, for January, which is expected to record a slowdown in growth to 2.4% from 2.6% in the previous reading on an annual basis.

While the higher-than-expected reading may contribute to putting more pressure on the euro, which is not far from its lowest levels for this year. This is because the mostly strong figures of the US economy are overshadowed by the lackluster numbers of the Eurozone economy across its various sectors, in addition to low levels of confidence in light of an environment of uncertainty regarding many crucial economic and political factors.

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