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    European Session – US Q3 GDP supports dollar, euro bounces on German Ifo

    The euro bounced on upbeat German Ifo data that showed the business climate index rose in November to come in at 109 from 108.2 in October. It was expected to remain unchanged. Meanwhile, German third quarter GDP was unrevised at 0.3% quarter-on-quarter.

    The euro bounced versus the dollar after the Ifo data but met resistance at 1.0668. After another bounce to 1.0672 in the early US session the euro fell back down to 1.0627.

    Sterling underperformed against the dollar to fall to a two-week low of 1.5053. Bank of England Governor Mark Carney testified before the UK Parliament’s Treasury Committee today. Carney told law makers that low UK interest rates may prevail for some time and that rate increases, when they happen, will be limited. BoE chief economist Andy Haldane, also providing testimony for parliament, was dovish and suggested that downside risks to UK growth and inflation remained.

    The dollar hovered near a one-week low against the yen in choppy trading between 122.34 and 122.65. There was a raft of US economic data releases today but it was the revision to third quarter GDP that had the most market impact.

    The US economy grew faster than initially thought in the third quarter, which will likely reinforce expectations for the Fed to hike interest rates in December. The second estimate of the June-September period (Q3) GDP showed an upward revision to 2.1% growth, from a first estimate of 1.5% that was reported last month.

    Other US data included the October advanced goods trade balance which worsened to -$58.41 bln from -$58.63 bln in September.

    The S&P/CaseShiller house price index showed that the gradual increase in house prices continued in the US, with the composite index of 20 metropolitan areas posting a slightly higher year-over-year gain of 5.5 % in September 2015 versus a 5.1 % increase in August 2015. It was above the 5.1% estimate.

    One last US data point was the Conference Board’s measure of consumer confidence in the US. The index for November unexpectedly fell to 90.4, the lowest since September 2014. Economists had estimated that the index would rise to 99.5 from a revised 99.1 (up from 97.6) in the prior month.

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