US Wrap: Forex markets turn frothy after GDP beat
- 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 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.
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.
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.
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– Edited by Robert Ryan
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Michael O'Neill is an FX consultant, currency strategist and author of the Trade of the Day at Loonieviews.net. Follow Mike or post your comment below to engage with Saxo Bank's social trading platform.