Robust GDP data helps maintain USD strength
Daily Currency Update
The US dollar index (DXY) traded near 106.5 this morning, staying close to its highest point in almost two weeks. This was driven by an increase in Treasury yields due to strong economic data, highlighting the resilience of the US economy. In the third quarter, the US economy grew by an annualized 4.6%, surpassing the 4.3% forecast. This was mainly due to robust consumer spending. Additionally, the Gross Domestic Product (GDP) data release showed durable goods orders experienced a 4.7% increase in September, the largest increase since July 2020. The Federal Reserve is expected to hold rates in its upcoming policy meeting on November 1st.Key Movers
The euro saw a slight decline to 1.05 following the European Central Bank’s (ECB) meeting, where they decided to keep interest rates unchanged for the first time in over a year. Policymakers reiterated that maintaining interest rates for an extended period will significantly contribute to reducing inflation. This decision comes at a time when economic activity in the Eurozone remains sluggish, with looming recession risk.The pound made a comeback against the USD trading near the 1.21 mark following positive Q3 GDP data from the US. Prior to this, the GBP/USD pair had been under significant selling pressure due to a combination of bleak market sentiment caused by tensions in the Middle East and a grim economic outlook for the United Kingdom.
The USD/CAD pair strives to maintain stability after reaching a 7-month high yesterday above the significant price level of 1.38. The currency pair is still on an upward trajectory, benefitting from several factors, including falling oil prices, the Bank of Canada (BoC) keeping its monetary policy unchanged, and the overall strength of the USD. West Texas Intermediate (WTI) crude oil futures dipped to nearly $83 a barrel due to a robust USD and an indication of low demand.
Expected Ranges
- EUR/USD: 1.0533 - 1.0593 ▼
- GBP/USD: 1.207 - 1.2149 ▲
- AUD/USD: 0.6273 - 0.6338 ▲
- USD/CAD: 1.377 - 1.3834 ▲