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Suppose that official statistical data on two macro indicators were just released in the US. The price growth for past month proved 2.5% while market participants expected it to be 2.1%. The new number of claims for unemployment benets was 30,000 compared with 25,000 expected by the market.

a. What will be a response (if any) of the US dollar exchange rate against the euro? Why? What assumptions do you make with regard to the behavior of the European Central Bank and/or the US Federal Reserve?

b. Suppose that only data on claims for unemployment benets were published but not on ination. What would be a reaction of the USD/EUR in that case? Why?

c. Suppose that only data on ination were published but not on claims for unemployment benets. What would be a reaction of the USD/EUR in that case? Why?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M941963

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