US Q3 GDP Expands 4.9%, Dollar Index Edges Higher

USD Breaks 150 Yen; AUD, NZD Tumble, EMFX Dip

Summary:

The US economy grew by 4.9% in the third quarter, boosted by strong consumer spending, and better than expectations of 4.5%. September US Durable Goods Orders jumped 4.7%, the biggest increase since July 2020.

Against the Japanese Yen, the Dollar broke above the 150 level, settling at 150.38 (149.83). Japan’s Finance Minister Shunichi Suzuki remarked that authorities were watching currency moves with a “sense of urgency.” Traders shrugged off his comments.

The Dollar Index, a popular gauge of the Greenback’s value against a basket of 6 major currencies, edged higher to 106.63 from 106.53. The Euro dipped to 1.0555 (1.0593) after the ECB kept rates unchanged, at 5%. Sterling (GBP/USD) slid to 1.2125 against 1.2165 yesterday.

Risk leader, the Australian Dollar weakened against the robust Greenback. The Aussie tumbled to 0.6270, overnight and 1-year lows before rallying to close at 0.6325. The Kiwi (NZD/USD) fell to 0.5820 from 0.5850 previously.

The Dollar finished higher against the Asian and Emerging Market Currencies. USD/CNH rallied to 7.3250 from 7.3130. Against the Thai Baht, the US Dollar climbed to 36.25 from 36.20 yesterday.

The benchmark US 10-year treasury bond yield jumped to 4.95% before easing to finish at 4.84%. Other global bond rates eased. Germany’s 10-year Bund yield dipped to 2.86% from 2.89%.

Other economic data released yesterday saw Australia’s Annual CPI at 5.6% up from forecasts at 5.3%, but lower than 6.0% previously. The RBA’s preferred Trimmed Mean Inflation rose 1.2% in Q3, higher than estimates of 1.1% and the previous quarter’s 1%.

The Bank of Canada kept rates unchanged, at 5% as expected. US September New Home Sales soared 759K from 675K previously and higher than expectations of 678K.

USD/JPY – The Dollar broke above the 150 Yen level soaring to an overnight high at 150.78 before slipping to close at 150.38. Traders shrugged off comments from Japanese Minister Suzuki that the authorities were watching currency moves with a “sense of urgency.”AUD/USD – The Aussie Battler finished lower against the overall stronger Greenback to finish at 0.6325 from 0.6355 previously. Overnight, the Australian Dollar plummeted to a one-year low at 0.6270 before rebounding at the close. The Aussie saw an overnight high at 0.6331.EUR/USD – The shared currency eased against the US Dollar to finish at 1.0555 from 1.0593. The ECB kept rates unchanged at 5%. ECB President Christine Lagarde acknowledged the struggles of the Eurozone. Economic activity remains subdued and recession risks loom.GBP/USD – Sterling struggled against the overall stronger Dollar, settling at 1.2125, down from 1.2165 previously. The British Pound plunged to an overnight and 3-week low at 1.2070 before steadying. The overnight high recorded was 1.2140 in choppy trade.On the Lookout:

Today’s economic calendar is light and begins with the release of Japan’s Annual October Tokyo Core CPI (f/c 2.5% from 2.5% - ACY Finlogix), Japanese Annual October CPI (f/c 2.7% from 2.8% - ACY Finlogix).

China releases its September Industrial Profits (ytd f/c -9.0% from -11.7% - ACY Finlogix). France kicks off European data with its October Consumer Confidence (f/c 83 from 83 – ACY Finlogix).

Italy follows with its October Consumer Confidence (f/c 105.2 from 105.4 – ACY Finlogix). Canada starts off North America with its Preliminary September Wholesale Sales (m/m f/c 1.3% from 2.3% - ACY Finlogix).

The US rounds up today’s economic forecasts with its September Core PCE Price Index (m/m f/c 0.3% from 0.1%; y/y f/c 3.7% from 3.9% - ACY Finlogix), US September PCE Price Index (m/m f/c 0.3% from 0.4%; y/y f/c 3.4% from 3.5% - ACY Finlogix).

Finally, the US rounds up today’s data releases with its September Personal Income (m/m f/c 0.4% from 0.4% - ACY Finlogix) and September Personal Spending (m/m f/c 0.5% from 0.4% - ACY Finlogix).

Trading Perspective:

Welcome to Friday. The strong US economy will keep a bid on the Greenback. But, as it is the end of the week, expect profit-taking and positions adjustments to keep a lid on the US currency.

Asian traders will be closely watching Tokyo and the Japanese markets with the Dollar above the 150 Yen level.

The Dollar’s rise against the Yen has been orderly so far which should keep Japanese officials on the sidelines.

There are no major data releases scheduled for today either. It is Friday though, so keep the tin helmets close by and handy.

USD/JPY – the Dollar soared to an overnight and near one-year high at 150.78 before dropping to settle at 150.38 in late New York. On the day, look for immediate resistance at 150.80 followed by 151.10. Immediate support can be found at 150.00, 149.70 and 149.40. Look for more choppy trade today in this currency pair, likely between 149.80-150.80. (Source: Finlogix.com)

EUR/USD – The shared currency extended its fall against the Greenback to 1.0555 from 1.0593 previously. On the day, look for immediate support for the Euro at 1.0520 (overnight low traded was 1.0521). The next support level lies at 1.0490 and 1.0460. Immediate resistance can be found at 1.0585 followed by 1.0615. Look for the Euro to consolidate in a likely range between 1.0520-1.0590. Selling rallies is still the way to go for this currency pair.AUD/USD – The Aussie Battler tumbled to finish at 0.6325 from 0.6355 previously. Immediate support for the Aussie can be found at 0.6300 followed by 0.6270 (overnight low). A clean break of 0.6270 could see the Australian Battler down to 0.6200. Immediate resistance lies at 0.6360 (previous high was at 0.6355). The next resistance level is at 0.6390. Look for the Aussie to trade a likely range today between 0.6270-0.6370. With the market way oversold, prefer to buy dips today.GBP/USD – Sterling slid against the broad-based stronger US Dollar to 1.2125 from 1.2165. On the day look for immediate support for the British Pound at 1.2100 followed by 1.2070. Immediate resistance is found at 1.2150 (overnight high traded was 1.2140). The next resistance level is at 1.2180. Today, look for Sterling to trade in a likely 1.2070-1.2170 range.

Happy trading and Friday all. Have a top weekend ahead.

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