EUR/USD Erases Three Days of Gains

US gross domestic grew a tad slower in the previous quarter than analysts had expected, but that did not prevent the dollar from rising. In fact, the greenback erased its losses versus the euro for the previous three days of the four-day decline. Yet the major event for the Forex market on Friday happened outside of the United States and Europe as the Bank of Japan announced surprise monetary easing, sending all currencies higher against the yen.
Advance (the first) estimate of US GDP showed that economic growth slowed from 2.0% in Q3 2015 to 0.7% in Q4. That was a bit lower than a 0.8 percent gain predicted by analysts. (Event A on the chart.)
Chicago PMI rose sharply from 42.9 in December to 55.6 in January, far exceeding the predicted value of 45.4. The report stressed that the current surge of economic activity followed “significant weakness in the previous two months,” and some easing could expected in February. (Event B on the chart.)
Michigan Sentiment Index slid from 92.6 in December to 92.0 in January according the revised estimate. The actual figure was nowhere near the average forecast of 93.1 and the preliminary reading of 93.3. (Event C on the chart.)


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