EUR/USD Jumps Up & Down on Mixed Fundamentals

EUR/USD was volatile today as the impact of concerns about Europe and the resulting demand for the dollar as a safe haven was negated by worries about the situation in the United States. The congressional deficit-reducing supercommittee failed to reach consensus on spending cuts required to tackle the budget shortfall. Despite the political impasse, rating agencies signaled that they aren’t going to lower the US credit rating. The fundamental reports were also mixed today as the better-than-expected report about manufacturing followed the GDP report that was worse than experts predicted.
US GDP grew 2.0% in the third quarter of this year, according to the preliminary estimate. The reading was worse than the economists’ forecast of 2.4% and the advance estimate of 2.5%, but better than the 1.3% growth in the second quarter.
Richmond Fed manufacturing index rebounded to 0 in November from -6 in October. Analysts expected a reading of -2. The report said that most indicators showed a modest improvement of manufacturing conditions.
The minutes of the Federal Open Market Committee monetary policy meeting were released today, showing that the members of the FOMC discussed additional monetary stimulus:

A few members indicated that they believed the economic outlook might warrant additional policy accommodation. However, it was noted that any such accommodation would likely be more effective if it were provided in the context of a future communications initiative, and most of these members agreed that they could support retention of the current policy stance at this meeting.

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