The euro traded little changed against the US dollar on Friday, as Janet Yellens dovish remarks at a testimony yesterday, provided a boost to riskier assets, but however, euros upside movement seemed to remain restrained, because of the GDP reports, released out of several Euro zone countries on Thursday.
EUR/USD slipped to a session low at 1.3446 at 8:10 GMT, after which consolidation followed at 1.3457, dipping a mere 0.01% for the day. Support was likely to be received at November 14th low, 1.3418, while resistance was to be seen at November 14th high, 1.3495.
Yesterday’s testimony by Federal Reserve Bank governor-nominee Janet Yellen indicated that a scale back of central bank’s stimulus may not occur in December, as was expected, especially after the most recent upbeat non-farm payrolls report, released out of the United States.
“We have made good progress, but we have farther to go to regain the ground lost in the crisis and the recession”, Yellen said in a testimony on Thursday. “Unemployment is down from a peak of 10 percent, but at 7.3 percent in October, it is still too high, reflecting a labor market and economy performing far short of their potential. At the same time, inflation has been running below the Federal Reserve’s goal of 2 percent and is expected to continue to do so for some time.”
According to the median estimate of 32 economists in a survey, the Federal Reserve Bank will pare back the monthly pace of its asset purchases to 70 billion USD at the policy meeting on March 18th-19th from the current 85 billion USD per month.
Meanwhile, demand for the euro was pressured, after preliminary data published on Thursday showed, that the Gross Domestic Product of the Euro zone increased merely 0.1% during the third quarter compared to the second, when economy expanded 0.3%, following six consecutive quarters of recession due to the debt crisis.
Germany’s preliminary Gross Domestic Product rose 0.3% in the third quarter, compared to the second three months, meeting expectations but decelerating in comparison with Q2, when economy grew 0.7%.
French economy, on the other hand, contracted 0.1% during the third quarter of the year compared to the second quarter, following a 0.5% gain in Q2.
The upside movement of the euro may remain limited as a report is forecast to confirm that annual consumer inflation in the Euro region decelerated to 0.7% in October, which would be the lowest level since 2009, as the corresponding index stood at 1.1% in September. The harmonized index of consumer prices probably dropped 0.1% on a monthly basis, official data may show, according to the median estimate of economists in a Bloomberg poll.
Elsewhere, the euro was steady against the pound, with EUR/GBP cross dipping 0.01% on a daily basis to trade at 0.8378 at 9:04 GMT. EUR/JPY pair, on the other hand, was gaining 0.29% to trade at 135.02 at 9:05 GMT.