Hi all,
When the better than expected US GDP figure (+3.5%) was released last Thursday, this caused the dollar to weaken (surprisingly) and commodities to rally. Yet when the UK released it’s weaker than expected GDP figure (-0.4%), we saw the sterling weaken – perhaps on expectations that the Band of England would extend its quantitative easing policy and interest rates would continue to remain low for the foreseeable future.
Why did the dollar weaken on good news when the sterling declined on bad news?
I realise that a better than expected US GDP figure would cause expected future demand of commodities in the US (one of the world’s largest consumers, apart from China of course) to increase as the economy grows, hence the increase in commodities’ prices. Am I correct in thinking this was the reason for the rise in commodities or was it actually due to a weakening dollar, or a combination of both?
When the better than expected US GDP figure (+3.5%) was released last Thursday, this caused the dollar to weaken (surprisingly) and commodities to rally. Yet when the UK released it’s weaker than expected GDP figure (-0.4%), we saw the sterling weaken – perhaps on expectations that the Band of England would extend its quantitative easing policy and interest rates would continue to remain low for the foreseeable future.
Why did the dollar weaken on good news when the sterling declined on bad news?
I realise that a better than expected US GDP figure would cause expected future demand of commodities in the US (one of the world’s largest consumers, apart from China of course) to increase as the economy grows, hence the increase in commodities’ prices. Am I correct in thinking this was the reason for the rise in commodities or was it actually due to a weakening dollar, or a combination of both?