The US dollar was higher against major pairs on Thursday. The greenback is near 2018 highs as risk aversion has made the currency a preferred safe haven destination. The US stock market rebounded with a 3 percent rise as buyers went back into the market stoping the decline that wiped out this year’s gains.
The US GDP first estimate for third quarter will be released on Friday, October 26 at 8:30 am. Economists are forecasting a 3.3 percent gain. Geopolitical uncertainty and rate differentials will continue to weigh on markets. The ECB did not provide any further guidance and did not properly address the rising headwinds facing Europe.
- US Growth lower than last quarter but still ahead of other major economies
- US GDP price index forecasted at 2.1 percent
- US yields remain near 3.12 percent
Euro Lower Despite ECB Sticking to End QE
The EUR/USD lost 0.16 percent on Thursday. The single currency is trading at 1.1373 after European Central Bank (ECB) President Mario Draghi pledged to continue its tightening policy. The ECB chief once again had a negative effect on the currency. As Draghi continued his press conference he highlighted the headwinds facing Europe, but the market does not share the optimism of the central bank.
With the upcoming mid-term elections in the US the first estimate of the Gross Domestic Product (GDP) for the third quarter rises in importance. A strong reading is expected given the US economy has kept up the rate of recovery. The market is pricing in a 3 percent rise, but a higher growth rate is possible with political and economic implications.
The US economy appears to have slowdown from last quarter but even Fed Banks are torn on where the data point will come in. New York Fed estimates a 2.13 percent rise and the Atlanta Fed at 3.6 percent. This being the first release it is subject to further revisions, but they usually don’t have the same impact as the advance data.
Market events to watch this week:
Friday, October 26
8:30am USD Advance GDP q/q
*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar