The dollar snapped four days of gains against the euro as the US economy returned to growth in the three months through September, officially exiting recession.
- The US government’s advance estimate showed gross domestic product grew at an annualised rate of 3.5% in the third quarter, the first rise since the second quarter of 2008, which beat expectations for a reading of 3.3%.
- The data reduced the safe-haven appeal of the greenback, encouraging investors to sell their dollar holdings in favour of growth-linked currencies, enabling the euro to climb over a cent on the day.
- Analysts did note however, that concern may still linger over whether the US economy will be able to sustain this level of growth as the government begins to unwind its stimulus packages.
- In addition, trading yesterday saw the European Commission’s economic sentiment indicator post a bigger-than-expected October rise. The index for the eurozone rose to 86.2 from 82.8 in September, beating expectations and lending support to the single currency’s rally.