Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 29 November 2017 at 23:13 GMT

US Wrap: Forex markets turn frothy after GDP beat

FX Trade Strategist /
  • US GDP growth in Q2 beat forecasts and the figure for the previous quarter
  • There was nothing new in Janet Yellen’s speech, but it kept USD supported
  • A tick-up in oil prices was erased on concerns about today's Opec meeting
  • Higher than expected CPI data will lend support to EURUSD

By Michael O'Neill

NY Focus:
US GDP data and outgoing Fed Chair Janet Yellen’s testimony to Congress were expected to set the tone for the New York session. And they both did.

GDP expanded by 3.3% in Q3, beating the forecast (3.2%) and the previous print (3.0%). The result was close enough to expectations that it shouldn’t have mattered much, but it did, briefly.
EURUSD dropped from 1.1847 to 1.1818, and USDJPY popped to ¥112.05 from ¥111.52.

EURUSD recouped its losses while USDJPY consolidated its gains after Yellen’s speech. The Fed Chair was positive on the economy, expecting it to remain strong while inflation moved toward its target. Nothing new, but enough to keep the US dollar supported.

Sterling remained elevated. GBPUSD traded in a 1.3375-1.3444 range, supported by the recent Brexit developments.

The GDP beat and Yellen’s speech undermined the commodity currency bloc. USDCAD closed near the session peak while AUDUSD finished almost flat. NZDUSD was the biggest loser, and those losses extended at the end of the day when a data released showed that New Zealand Building Permits were down 9.6% for October.

While there was nothing much new in the speech given by Fed Chair Janet Yellen, her comments on inflation and the economy helped support the US dollar. Photo: Shutterstock.

Gold prices were hammered by the GDP rise. The yellow metal dropped from $1,294.73/oz at the open to $1,285.35 at the close.

Crude oil prices were volatile. WTI spiked to $58.25/barrel from $57.92/b at the open when the EIA Weekly Crude Stocks report showed a decline of 3.43 million barrels. But that rise was erased on concerns about today's Opec meeting statement. Prices dropped to $56,77/b by lunch time on Wednesday, then drifted higher in the afternoon, closing at $57.39/b.

Wall Street finished with mixed results. The Dow Jones Industrial Average rose 0.44%, the S&P 500 finished flat, and the Nasdaq dropped 1.27%.

Thursday Focus: Eurozone inflation data highlights a heavy European data calendar that includes Eurozone unemployment, Swiss GDP and German Retail Sales. CPI is forecast to rise 1.6% and core CPI 1.1%, year over year.

Higher than expected CPI data will be icing on the cake to earlier strong economic reports and support EURUSD. As long as EURUSD support at 1.1810-20 is intact, a revisit to 1.1965 is likely.

30 minute EURUSD chart

Source: Saxo Bank. Create your own charts with SaxoTrader; click here to learn more.  

– Edited by Robert Ryan

For more on forex, click here.

Michael O'Neill is an FX consultant, currency strategist and author of the Trade of the Day at Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail