The dollar has lost ground against all of its major competitors on Wednesday, following the unexpected decrease in U.S. GDP for the fourth quarter. Investors have also taken a cautious approach ahead of the announcement from the 2-day FOMC meeting, which is due to be released later this afternoon.
Economic activity in the U.S. unexpectedly contracted in the final three months of 2012, according to a report released by the Commerce Department on Wednesday, with GDP falling for the first time in over three years.
The report showed that GDP edged down by 0.1 percent in the fourth quarter after surging up by 3.1 percent in the third quarter. The modest drop came as a surprise to economists, who had expected GDP to increase by about 1.0 percent. The decrease also reflected the first drop in GDP since the second quarter of 2009.
Private sector employment in the U.S. increased by more than anticipated in the month of January, according to a report released by payroll processor Automatic Data Processing, Inc. (ADP) on Wednesday.
The report showed that private sector employment increased by 192,000 jobs in January compared to economist estimates for an increase of about 172,000 jobs. However, ADP also said that the job growth in December was downwardly revised to show an increase of 185,000 jobs compared to the addition of 215,000 jobs that was originally reported.
Spanish region Catalonia has requested EUR 9.07 billion in bailout money from the country's regional liquidity fund, the regional government said in a statement on Tuesday. This is on the top of EUR 5 billion sought by the region in August last year. Catalonia is the most indebted of Spain's 17 autonomous regions.
Catalonia said it intends to use as much as EUR 7.68 billion to meet the debt payments. The remaining amount will be used to help the government attain its deficit targets.
More euro area banks are expected to tighten credit standards for corporates in the first quarter of 2013 than in the previous quarter, the latest bank lending survey by the European Central Bank revealed Wednesday.
The survey revealed that a net 15 percent of banks expect to tighten lending standards for businesses in the coming three months, up from 13 percent in the final quarter of 2012. However, the lenders foresee easing of credit standards for housing loans and consumers this quarter.
The dollar has extended yesterday's weakness against the Euro on Wednesday and has dropped to over a 14 month low of $1.3577.
Eurozone economic sentiment strengthened more-than-expected to a seven-month high in January, suggesting that the region's economic downturn may have bottomed out, according to the results of a closely watched survey from the European Commission showed on Wednesday.
The economic confidence index climbed to 89.2, the highest since June, from a revised 87.8 in December. The score came in above the consensus forecast of 88.2.
The Spanish economy contracted more than forecast in the fourth quarter as harsh austerity measures aimed at reducing the country's huge public debt continued to hold back growth.
The gross domestic product contracted 0.7 percent quarter-on-quarter in the fourth quarter of 2012, the latest figures from statistical office Ine showed Wednesday. This was steeper than the 0.3 percent fall in the third quarter and the 0.6 percent contraction expected. The economy slipped into recession in the first quarter of 2012 and the GDP has fallen steadily since then.
Italy's manufacturing confidence deteriorated from the previous month in January, defying economists' forecast for an improvement, data released by statistical office Istat showed Wednesday. The manufacturing confidence index dropped to 88.2 in January from 88.9 in December. In November, the figure was 88.4. Economists were looking for a reading of 89.5 for January.
The greenback has pulled back to a low of $1.5800 against the pound sterling on Wednesday, from Monday's 5-month high of $1.5674.
U.K. mortgage approvals for house purchases increased more than expected to 55,785 in December from 54,011 in November, the Bank of England said Wednesday. It was forecast to rise to 54,500.
Total lending to individuals increased GBP 1.7 billion from a month ago, or 0.1 percent. Within total lending, lending secured on dwellings rose GBP 1 billion. On a monthly basis, secured lending climbed 0.1 percent and was up 0.4 percent from a year ago.
The buck rose to a 31-month high of Y91.395 against the Japanese Yen on Wednesday, but has since pulled back to around Y91.055.
Retail sales in Japan added a seasonally adjusted 0.1 percent in December, the Ministry of Economy, Trade and Industry said on Wednesday, worth 13.098 trillion yen. That was shy of forecasts for an increase of 0.4 percent following the downwardly revised 0.1 percent contraction in November.
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Forex News
May 22, 2026 14:46 ET Minutes of the latest Fed policy session was the highlight of the week along with survey data on the U.S. housing market. In Europe, survey data signaled the trends in the euro area private sector. Further, consumer price inflation data from the U.K. was in focus. In Asia, various economic indicators from China drew attention to the health of the economy.