Tonight's release of US GDP and Philly Index data failed to motivate dollar traders.

Some high-impact US economic data tonight (21/December) missed market forecasts. As a result, the US dollar exchange rate weakened against various other majors. The US Dollar Index (DXY) fell around 0.4% to a low of 101.80. 

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The release of the final version of the US Gross Domestic Product (GDP) data for the third quarter of 2020 showed growth of 4.9% (quarter-over-quarter). The figure missed by quite a distance from 5.2% in the previous reporting.

The Philadelphia Federal Reserve reported that the Manufacturing Index recorded -10.5 in the December survey results. Whereas, the previous consensus expected the data nicknamed "Philly Index" to improve to -3.0 from -5.9 in November.

Market participants now expect tomorrow's Personal Consumption Expenditure (PCE) data release to show a downward trend in inflation in Uncle Sam's country. A Reuters survey suggests the PCE inflation rate on an annualized basis may fall to 3.3% - the lowest level since 2021.

This set of data prompted the market to dump the US dollar. In addition, some analysts think year-end market dynamics are likely unfavorable for the USD.

"The outperformance of US equity markets into December suggests that hedging rebalancing flows will passively work against the USD into month-end," said Shaun Osborne, chief FX strategist at Scotiabank, "Although markets look relatively calm and trading flows appear thin, there may still be motivation to push spot rates."

USD/JPY is observed to have collapsed nearly 1% to the 142.00 range at the time of writing. EUR/USD consolidated near the 1.1000 threshold, and AUD/USD bounced around 0.8% to its highest level since July 27. GBP/USD posted the smallest gains among the major pairs, as Sterling is still weighed down by yesterday's disappointing UK inflation data release.