(CercleFinance.com) – The Dollar continues its post-FED bullish rally: the ‘$-Index’ climbs further +0.35% to 108.45 (the highest since November 2022).
The Euro remains weak around 1.0365, the Pound and the Canadian Dollar are still down -0.5%, the Yen is the weakest with -1.8% at 157.65 (with a ‘catch-up’ effect).
Jerome Powell surprised currency traders on Wednesday evening: he warned that the strategy of the American Federal Reserve on the trajectory of its rates would change in 2025 due to a less marked decline than expected in inflation: instead of 4 easings hoped for by the most optimistic (from 4.25% towards 3.25/3.50%), Jerome Powell suggests that only 2 could remain.
He evokes the entry into a ‘new phase’ of the central bank’s policy, marked by a slower pace of rate cuts than before.
And today’s US figures are not going to bring relief:
in fact, the growth of the American economy was stronger than expected in the 3rd quarter. US GDP thus increased by 3.1% at an annualized rate, compared to 2.8% in the second estimate, after an increase of 3% in the second quarter, announced the Department of Commerce.
In a press release, the administration explains this upward revision by the acceleration of exports, household consumption and federal government spending.
Furthermore, the PCE price inflation index was confirmed at 1.5% in raw data over the past quarter, but it stood at 2.2% excluding food and energy, i.e. an upward revision of 0.1 percentage point compared to the previous estimate.
This publication comes as Jerome Powell, the president of the Fed, yesterday conditioned the continuation of the monetary easing of the American central bank on a favorable evolution of inflation.
Another sign of strength, leading indicators are starting to grow again (+0.3% after 23 months of trend decline) and sales of existing homes in the United States increased by 4.8% in November, compared to the previous month. , to settle at a seasonally adjusted annual rate of 4.15 million, according to the National Federation of Realtors (NAR).
According to NAR Chief Economist Lawrence Yun, ‘Momentum in home sales is intensifying. More buyers are entering the market as the economy continues to add jobs, housing supply increases from last year and consumers get used to a new normal with mortgage rates between 6% and 7%.
A small downside to the strength of growth in the US, manufacturing activity in the Philadelphia region contracted in December, according to the local Fed survey, the diffusion index of current general activity (Philly Fed) having gone from -5.5 in November, to -16.4 in December.
About 33% of businesses reported a decrease in overall activity this month (compared to 23% the previous month), while 16% reported an increase (little change); 47% reported no change (compared to 58% previously).
The new orders index fell sharply by 13 points to -4.3, its lowest level since May, and the shipments index fell 6 points to -1.9.
Furthermore, the Department of Labor announces having recorded a drop of -22,000 in new registrations for unemployment benefits in the United States during the week of December 9 (220,000 compared to 242,000 the previous week).
The number of people regularly receiving compensation fell by 5,000 to stand at 1,874,000 during the week of December 2, the most recent period available for this statistic.
Finally, across the Channel, the crisis situation is exacerbated with ‘Gilts’ which posted up to +14Pts towards 4.7050% before reducing the gap slightly to 4.6400% (i.e. +8Pts base) : The Pound could fall on hard times, the Starmer government is in a difficult situation.
