back
Details Cookies
Cookie policy

This website uses cookies to offer you a better browsing experience by enabling, optimising and analysing site operations, as well as to provide personalised ad content and allow you to connect to social media. By choosing “Accept all” you consent to the use of cookies and the related processing of personal data. Select “Manage consent” to manage your consent preferences. You can change your preferences or retract your consent at any time via the cookie policy page. Please view our cookie policy here and our privacy policy here

background image

NY Open: Will GDP stave off disaster?

Forex 4 minutes to read

Michael O’Neill

FX Trader, Loonieviews.net

Summary:  Equity markets remain in a funk following earnings disappointments from Amazon and Alphabet, but US GDP came in ahead of forecasts into the New York bell.


Amazon (AMZN: Nasdaq) and Alphabet (GOOGL: Nasdaq) didn’t do global equity markets any favours when their earnings releases disappointed analysts, but this morning’s GDP data may have been the balm for the burn. However, the evidence is sparse in early trading. 

Wall Street is taking it on the chin at the market open. The tech-heavy Nasdaq is down 2.25%, the S&P 500 is down 1.5%, and the Dow Jones Industrial Average dropped 1.02%. However, this morning’s GDP report lifted equity futures off their lowest levels, and there is still hope for additional gains into the weekend.

US GDP rose 3.5% in Q3, beating the 3.3% forecast. The US Bureau of Economic Analysis attributed the gain to increases in personal consumption (PCE), private industry investment. and federal government spending. FX markets channelled Shaina Twain and sang “that don’t impress me much”; the US dollar stopped rising, but the retreat has been shallow.

Real GDP
The US Dollar Index rally from the end of September is approaching good resistance in the 96.90 area. If this area contains the top side, the dollar should retreat.

Next week is going to be busy. FX volatility may surge thanks to a couple of major central bank policy meetings, month-end portfolio rebalancing flows, and the US nonfarm payrolls report. The Bank of Japan policy meeting is Wednesday, and the Bank of England follows on Thursday. 

Sterling could get a little wobbly around Monday’s UK budget announcement. The BoE is expected to stand pat, handcuffed by the dilemma around Brexit. Eurozone GDP is expected to be unchanged (0.4% quarter-on-quarter), but Wednesday’s inflation data may cause a stir if higher than expected, especially since European Central Bank president Mario Draghi suggested that the December meeting may give increased clarity on the ECB’s outlook.  

Wednesday is month-end which means portfolio rebalancing flows. The substantial decline in US equity indices this month suggest large buying of US dollars, providing current levels hold. The week ends with US nonfarm payrolls data; inclement weather in October may distort the results.
USD Index
US Dollar Index (source: Saxo Bank)

Democratising trading
and investment for
more than 25 years.


Due to coronavirus controls, with many of our staff working from home, we are not able to meet with clients in our reception at present, unless by appointment in exceptional circumstances. We remain at your service on the phone and email details below. Thank you for your understanding.

*Please expect very long waiting times on the line when calling us, we advise you to send us an email instead.

Contact Saxo

Select region

UAE
UAE

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.