020 7898 0500New Fed Chair Jerome Powell said he backed gradual interest rate rises yesterday and appeared to suggest there could be four interest rate rises in 2018. While he didn’t go as far as explicitly stating this, he did say that since three hikes were projected the US economy has strengthened. The dollar strengthened against the euro and sterling soon after, with the dollar index hitting a five-and-a-half-week high during his testimony.
The main economic data release in the US was the durable goods orders which slumped by 3.7% month-over-month in January 2018. This followed a revised 2.6% rise in December 2017 and came in way below expectations of a 2% drop. It is the biggest decline for six months.
On what is a busy day for economic data, the key release is the second estimate of the US GDP growth rate for the fourth quarter of 2017. The first estimate put the figure at 2.6% from 3.2% in the third quarter, but it is forecast to be revised downwards to 2.5%. It will be fascinating to see what the actual figure is, especially given the recent eurozone (2.7%)
and UK (1.7%) GDP growth rate figures. In addition, we will see pending home sales for January.
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