The euro edged slightly lower against the US dollar, after data showed the number of initial jobless claims in the US fell to a 16-week low last week, while the economy expanded more rapidly in the final three months of 2013 than previously estimated as consumer spending jumped by the most in three years. However, the greenback came under selling pressure after pending home sales unexpectedly fell in February for an eighth consecutive month, adding to concerns the industry is losing momentum.
EUR/USD touched a session low at 1.3741 at 10:05 GMT, after which the pair trimmed losses to trade at 1.3768 at 14:23 GMT, losing 0.12% for the day. Support was likely to be received at March 6th low, 1.3722, while resistance was to be encountered at March 26th high, 1.3823.
Initial jobless claims in the US fell by 10 000 to 311 000 in the week ended March 22, the weakest level since early December, data by the US Department of Labor showed on Thursday. Analysts had expected the number of Americans who file for jobless benefits to reach 323 000 last week.
In addition, the US economy expanded at a 2.6% annualized rate in the final three months of 2013, slightly below analysts expectations of a 2.7% gain, but up from a preliminary estimate of 2.4%, a report by the the Bureau of Economic Analysis showed today. The US gross domestic product grew 4.1% in the third quarter.
Data also showed that personal consumption expenditures rose 3.3% in the fourth quarter, the most since the final three months of 2010, exceeding analysts projections of a 2.8% increase and up from an initial estimate of 2.6%. Consumer spending is regarded a key economic indicator as it typically accounts for almost 70% of the US economic growth.
Strong consumer spending on services, especially in the health care sector, helped boost the expansion, a sign this years slowdown can be partly attributed to the inclement weather.
However, the greenback came under selling pressure after the National Association of Realtors reported its index of pending home sales fell 0.8% last month, after a 0.2% drop in the previous month that was previously reported as a gain. The median forecast of experts called for a 0.2% increase.
“For housing, it’s been primarily an issue of bad weather,” Russell Price, senior economist at Ameriprise Financial Inc. in Detroit, said in a Bloomberg interview before the report.“Not a lot of buyers were enticed to go out and look, and not a lot of sellers put their best foot forward” in terms of staging the property or hosting an open house. “Conditions will improve as the weather improves,” he added.
Meanwhile, demand for the 18-nation common currency remained under pressure amid speculation the European Central Bank may signal additional monetary stimulus next week, to bolster the economic recovery.
The governor of the Bundesbank and member of the ECB Governing Council, Jens Weidmann commented on March 25 that central bank policy makers haven’t ruled out introducing further stimulus to spur economic growth in the euro area.
Weidmann said the ECB bank may use negative interest rates to counter further appreciation of the 18-nation common currency and added that policy makers have not ruled out introducing new stimulus to fight against deflation. Stimulus programs tend to weaken a currency.
“If any downside risks to this scenario appear, we stand ready to take additional monetary policy measures that ensure our mandate is fulfilled,” European Central Bank President Mario Draghi said yesterday, cited by Bloomberg. ECB policy makers, who lowered the main interest rate to a record-low 0.25% in November, are set to reconvene on April 3rd.
Elsewhere, USD/NOK touched a session low at 5.9995 at 13:35 GMT, after which consolidation followed at 6.0009, losing 0.8% for the day. Support was likely to be received at March 19th low, 5.9503, while resistance was to be met at March 21st high, 6.0868.
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