Article / 27 October 2016 at 22:10 GMT

US Market Wrap: Dollar firms ahead of Friday's GDP update

FX Trade Strategist / www.Loonieviews.net
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Watchlist:
  • Japan: Consumer Price Index 1930 GMT 
  • New Zealand: ANZ Business Confidence 2000 GMT 
  • Australia: HIA New Home Sales-October 2000 GMT 
  • Australia: Producer Price Index 2030 GMT 

US Data released:
  • Durable Goods -September (Actual -0.1% vs. forecast 0.1%, ex-transportation-0.2% as forecast) 
  • Jobless claims (Actual 258,000 vs. forecast 255,000) 
  • Pending Home Sales-September (Actual 1.5% vs. forecast 1.2%) 

The US dollar entered the New York session without any direction and traders were content to see where the economic data pointed. Initial data releases, on Durable Goods and Jobless claims, didn’t move the needle much. In fact, the modest decline in headline Durable Goods encouraged a bit of US dollar selling. That selling became more pronounced into the 1600 GMT fixing time (that was maybe just a coincidence) but EURUSD climbed to 1.0940 from 1.0905 between 1500 GMT and 1600 GMT.

Sterling was under pressure throughout the day on Thursday, falling from 1.2264 to 1.2162 at the close. The better than expected GDP report was discounted for not being Brexit relevant.

USDJPY, which was already moving higher, accelerated on the release of Pending Home Sales data. That data didn’t hurt expectations for a December rate hike, which may have been reinforced by a bump in the Atlanta Fed’s GDPNow figure on October 19, which came out at 2.1%; up from 2.0%. The commodity currency bloc traded with a negative bias throughout the session on Thursday as WTI prices stayed below $50.00/barrel. USDCAD pierced resistance at 1.3400 and peaked at 1.3405.

Oil prices were still feeling the effects of long contract positioning and jitters that a production cap agreement may not work, as there could be too many exemptions. WTI traded choppily within a $49/06/barrel to $50.03/b range.

US equity indices were torn between gains and losses and with government bond selling undermining confidence closed in the red. Amazon (AMZN: NASDAQ) reported a smaller than expected third quarter profit and its shares decline 4.8% in after hours trading.

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Oil market have the jitters, partly due to the belief that there are too many exemptions to any crude production cap deal to make it workable. Photo: iStock
Opinion:

US and British data suggests that there are different risks about, writes TradingFloor contributor, Neil Staines in: Downside up, upside down?

– Edited by Robert Ryan

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Michael O'Neill is an FX consultant at IFXA Ltd. Follow Mike or post your comment below to
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