Amidst the news that the U.S. consumer spending has increased for a third month, the USD reached the highest in four weeks against a basket of its peers. The better performance of the currency is attributed to better-than-expected U.S. growth data. Market analysts also rue that it may also be due to easing concerns about an imminent U.S.-led strike on Syria.
Today the euro traded at $1.3245, 98.18 yen for $1. On the other hand, the euro fetched 130.03 yen. The news of better performance of the USD is coming amidst the Commerce Department data showing that the U.S. economy grew at an annualized 2.5% in the second quarter which is well above the 1.7% that was estimated earlier.
Indian national currency seems to have been major trouble in the last one month wherein its exchange rate against the USD has fallen to record levels. Similar to the Indian national currency, Indonesia’s rupiah fell to a great extent amidst the news that investors are pulling money from regional assets on slowing economic growth.
Slower economic growth in Asia is forcing investors to flee towards the U.S. and other better faring economies. Experts say that the overall weak sentiment is continuing as Asian economies are not showing positive results and it may hamper the investment further.
Increased Consumer Spending
There has been slight increase in consumer spending. Data show that purchases of goods and services in the U.S. increased 0.3 percent in July after a 0.5 percent advance in June. Market experts claim that though July Consumer Price Index (CPI) and employment data were better than what they were expected earlier, household spending has not been as was expected.
Better Economic Growth
The growth rate of 2.5% of the U.S. is even better than the 2.1% growth that was revised later. The changes are attributed to the higher exports from the U.S. and lower imports. Similarly, the country has seen a lot of investment coming back, particularly the housing sector is doing better than expected and may help the economy recover fast and move towards higher growth.
Economists predict that the U.S. will see a robust end to 2013. The better-than-expected second quarter will provide fuel to the Fed which may end its major economic stimulus program that it has been continuing for long now. Better than expected performance of the national economy will definitely force the Fed to rethink its stimulus and reduce its bond-buying program next month.
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