The United States' economy experienced a slowdown in growth during the final quarter of 2024, according to the latest economic data released. Preliminary figures revealed that the Gross Domestic Product (GDP) expanded at an annualized pace of 2.3%, falling short of the 2.6% consensus forecast. This growth rate represents a significant decline from the robust 3.1% expansion witnessed in the previous quarter. The data underscores challenges facing the US economy as it grapples with inflationary pressures and changing monetary policies.
In contrast to GDP growth, jobless claims in the US declined more than anticipated, with initial claims dropping to 207,000 from 223,000 the previous week. This unexpected decline reinforced the Federal Reserve's cautious stance on potential rate cuts. Fed Chair Jerome Powell emphasized that a recent change in the Fed's statement was not intended to signal a shift in policy direction.
Inflationary pressures continue to mount, as evidenced by the Personal Consumption Expenditures (PCE) price index, which surged to 2.3%. However, core PCE remained steady at 2.2%, falling short of expectations of 2.5%. These figures highlight ongoing challenges as policymakers navigate between fostering economic growth and managing inflation.
In global economic news, the European Central Bank (ECB) left interest rates unchanged as expected but removed language indicating progress toward its 2% inflation target. This decision signals a more vigilant approach by the ECB, as it monitors inflationary trends across the eurozone.
Meanwhile, market sentiment around the Australian dollar remains weak amid rising expectations of a rate cut by the Reserve Bank of Australia (RBA). Analysts at ANZ predict a 25-basis-point reduction in February. The AUD/USD currency pair stands neutral around 0.6235, struggling to gain momentum as traders await further economic data and policy announcements.
In terms of forex market dynamics, the Relative Strength Index (RSI) for the EUR/USD pair was recorded at 47, indicating it is still in negative territory but showing signs of recovery. This reflects ongoing uncertainty in currency markets as investors assess developments in both Europe and the United States.
The RBA is widely expected to adopt a more accommodative policy stance in the coming month, as concerns about domestic economic growth and global uncertainties influence its decisions. The anticipated shift toward policy easing aligns with broader global trends as central banks respond to evolving economic conditions.