Why did the US dollar significantly depreciate in Wednesday’s trading yesterday even though the US economic data showed a positive data reading?
The New York session yesterday saw the release of some US economic data and the focus was on the US economic growth data report through the final reading of Gross Domestic Product (GDP) for the third quarter.
Expected to remain, the reading figure on the other hand increased to 2.3% from 2.1% previously. US consumer confidence survey data also recorded an increase.
In addition, the market is also waiting for the latest developments after it was reported that the White House was considering discussing with US Senators on the issue of President Joe Biden's spending package which had previously been rejected.
Investors began to assess the recovery for the global economy with a good reading of the world’s largest economic growth creating positive market sentiment and prompting investors to shift towards high -return investments.
Thus, these risk-on sentiment factors have made safe-haven currencies including the US dollar, Yen and Swiss franc began to decline sharply in the New York session yesterday while risky currencies such as the Australian dollar and New Zealand dollar took advantage of opportunities to rebound.
Similarly, the European currencies, namely the Pound and the Euro, which recorded a strengthening, took advantage of the situation of the depreciation of the US dollar.
Although investors have previously seen positive projections for a strengthening US dollar following the Federal Reserve's (Fed) hawkish decision at the FOMC meeting, they still need to be wary of changes in current market sentiment that also affect the currency's movement.
In today's New York session (Thursday), the focus will be on the release of consumer personal spending index data in the US as well as US durable goods order data at 9.30 pm local time.
