Sharp Drop of EUR/USD After US GDP & Manufacturing Reports

Optimism for Ireland’s bailout quickly wore out and today EUR/USD currency pair experienced a significant decline. US GDP and manufacturing reports were better than expected, supporting the dollar, but existing home sales unexpectedly dropped. EUR/USD trades now at 1.3370 after opening at 1.3626.
Preliminary GDP increased at an annual rate of 2.5 percent in the third quarter of 2010, compared to the expected 2.3 percent increase. In the advance estimate, the increase in real GDP was 3.2 percent. In the advance estimate, the increase in real GDP was 2.0 percent. In the second quarter real GDP had increased 1.7 percent.
Richmond Federal Reserve manufacturing index posted an increase from 5 to 9 in November. It was somewhat higher than a forecast increase to 6.
Existing home sales slipped to 4.43 million in October from 4.53 million in September (seasonally adjusted annual rate). The average forecast for this housing indicator was at 4.51 million.
The minutes of the FOMC meeting signaled that US economy recovers, but still at slow pace. The minutes said that “the economic recovery proceeded at a modest rate in recent months, with only a gradual improvement in labor market conditions, and was accompanied by a continued low rate of inflation” and “the incoming data indicated that output and employment were continuing to increase, but only slowly”.

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