USD has recovered from some of yesterday’s losses. US Q3 GDP decelerated and grew by a lower-than-expected 2% following 6.7% growth in Q2. Personal consumption was better than expected in Q3 but significantly lower than in Q2. Net exports were down along with residential investments, though manufacturing inventories increased. As the market awaits next Wednesday’s FOMC meetings, the US Dollar Index is near monthly lows.
An update GDP is due out this morning, along with updates on Industrial Products and Raw Materials. During the Bank of Canada’s meetings on Wednesday, they revised the 2021 GDP forecast down from 5.1% to 5%, a percentage point drop from last year. WTI Crude prices are up slightly after falling to two-week lows yesterday. USD/CAD is trading in a tight range between 1.2371 and 1.2439 pending this morning’s news.
Analysts feel ECB President Lagarde did her part to try and push back on tightening expectations though her comments were virtually unchanged from the last meeting. Analysts say a 10-basis point interest rate hike in June of 2022 is almost priced into currency values. Still, the ECB insists inflation will fade next year. EUR/USD and is trading in a range between 1.15869 and 1.16908.
The pound is mostly sitting on the sidelines while other major currencies dominate the headlines. The latest Brexit-related tensions have been worse for the UK economy than COVID-19 and could lead to a GDP drop of around 4% in the long term. GBP/USD is trading between 1.37317 and 1.38131.
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