The greenback continued to show strength over its rivals, most especially its cousins (Australian, Canadian and New Zealand Dollar) after the Federal Reserve on Wednesday left its benchmark lending target, the fed funds rate, unchanged at 0.00%-0.25% and trimmed USD10 billion from its USD75 billion monthly asset-purchasing program in place to spur recovery.
A report on Thursday showed that Initial claims for state benefits rose 19,000 to 348,000. Claims for the prior week came in adjust 3,000 higher than what was reported last week. The estimates had expected only 330,000 new claims for the week ending January 25.
Further trimming of the bond-buying program could be seen if Labor Market keeps improving though a mixed figure was seen at December’s report. With the unemployment rate falling from 7.0% to 6.7%, the Feds see this as a positive impact in the U.S economy.
Further report on Thursday also showed that U.S GDP also grew at 3.2 percent. This was down from the Q3 reading which came in at 4.1 percent , however was better than we anticipated as some economists had thought the number would come in anywhere from 1.9 to two percent.
Overall we are seeing the US economy continue to expand and recover at a nice pace. This could lead to further reduction in the QE program if the numbers continue like this, which would fuel further demand of the greenback.