Archives of “October 2019” month

rss

The dollar moves higher after better GDP data

  
Analysis, Forex

GDP comes in at 1.9% for the 3Q in the advanced report

The dollar has moved higher after the better than expected US GDP for the 3Q. The growth came in at 1.9% annualized. The NY Fed GDPNow estimate was spot on this quarter at 1.9%. The Atlanta Fed model estimated growth at 1.7%.  The Bloomberg GDP estimates of economists came in at 1.6%.
  • The EURUSD has moved to a new session low and approaches the 100 hour moving average at 1.10999 (call it 1.1100).  A move below would be more bearish.
  • The USDJPY is out of its 9 pip trading range for the day (yes 9 pip).  The price moved from 108.81 to a high of 108.938.   Its 200 day moving average comes in at 109.027 today.  Yesterday, the price moved above that moving average line but only briefly before backing off. A move above is needed to increase the bullish bias for the pair.
  • The USDCHF has moved up to test its 100 hour moving average at 0.99372. A move above would be more bullish for that pair.
  • The USDCAD has cracked back above its 200 hour moving average 1.3085 and trades near its high for the day at 1.3095. The high price from yesterday reached 1.3100 and backed off. The Bank of Canada is expected to keep rates unchanged at 10 AM ET.
  • The AUDUSD has moved lower and trades at 0.6855 (the high for the day was up near 0.6875. The pair is approaching its 100 day moving average at 0.6847. The 200 hour moving average is not far away at 0.6846.  Below that the pair’s 100 hour moving average comes in at 0.68371.
  • The highs in the NZDUSD tested it’s falling 100 hour moving average (currently at 0.63588). The data sent the pair lower and away from the at MA line and is testing the days lows at 0.6344.  The low from yesterday reached 0.6338 and the low for the week reached 0.6333.
Overall the dollar is higher against all the major currency pairs. US stocks initial reaction was a modest rise. The Dow is up about 30 points.  The Nasdaq is up about 15 points.
US yields have moved a little higher, but just barely higher.

US Q3 advance GDP +1.9% vs +1.6% q/q annualized expected

  
Analysis, Economy

The first look at third quarter 2019 US GDP:

US GDP chart
  • The final Q2 reading was +2.0%
  • Personal consumption +2.9% vs +2.6% expected
  • Prior consumption 4.6%
  • GDP price index 1.7% vs 1.9% exp
  • Core PCE q/q +2.2%
  • GDP deflator 1.6% vs 1.9% exp
The inflation side of this report was significantly softer than anticipated and that’s the reason for the bulk of the upside beat.
Percentage contributions:
  • Personal consumption added 1.93 pp
  • Gross private investment -0.27 pp
  • Inventories -0.05 pp
  • Net exports -0.08 pp
  • Government consumption +0.35 pp
The consumer is solid and inventories didn’t skew anything but the numbers are a bit softer than they look. It’s rare that net exports aren’t a drag and the trade deficit isn’t going away any time soon. At some point, governments will have to pull back on spending too.

Mnuchin: US economy continues to be strong

  
  Analysis

Comments by US Treasury secretary, Steven Mnuchin, in Riyadh

  • US economy is strong, with low unemployment and low inflation
  • But there is no question that global growth is slowing down
  • China needs to do more on the fiscal side and regulation to maintain growth
A strong economy with strong rate cuts. Makes sense. As much as the Fed is trying to get ahead of the curve, it’ll be their own downfall if they have not enough spare capacity to cut rates further in the event of a major downturn.

Christine Lagarde: Global economic growth is fragile

  
Analysis, Economy

Incoming ECB president, Christine Lagarde, is speaking on French radio

Lagarde
  • Trade wars, Brexit and geopolitics contributing to fragility
  • Trade tensions are taking a toll on confidence
  • Some euro area states need to do more to promote economic gwroth
  • Some states should use their budget surpluses for investment
Not a different message to what we have heard from Draghi and ECB members over the past few weeks. And I wouldn’t expect her appointment to shake things up in that regard.

FOMC meet today – rate cut is widely expected but its ‘what’s next?’ of most focus

  
  Analysis
#  #  #  #  #  #
Via the WSJ a good in summary look at what will be the focus in the
  • Without signs of a sharper deterioration in economic data, officials on Wednesday may seek to tamp down on expectations that they will keep cutting rates-including at their final scheduled meeting of the year in December
  • At the same time, soft economic data of late could make officials uncomfortable delivering an “all clear” signal, particularly because any residual damage from the U.S.-China trade war may not yet be fully reflected. 
The Journal characterize Powell press conference as him walking a tightrope given those two points they make.
Other metaphors include:
  •  “The challenge is threading a needle where the eye has become extremely tiny,” said Ellen Zentner, chief U.S. economist at Morgan Stanley
Link here for more, may be gated.
Earlier previews of the Federal Reserve Federal Open Market Committee policy meeting are here:

China’s UN envoy says US criticism of China re Xinjiang is not helpful for trade talks

  
Analysis, Politics

China’s envoy to the United Nations with the comment:

  •  Says US criticism of China’s policy in Xinjiang is not ‘helpful for having a good solution to the issue of trade talks’

Xinjiang is in northwest China, home to many ethnic minority groups. Yhe US has been vocal in its criticism of treatment of these groups, including the Uyghur people.

The comment highlights that there are issues beyond trade talks. Reminders of these tend to have a negative impact on ‘risk’, for example AUD/JPY.

ICYMI – China to loosen restrictions on foreign investment

  
  Analysis
  Tags

Late Tuesday/overnight news on China

  • China will eliminate all restrictions on foreign investments not included in its self-styled “negative lists”
  •  also will “neither explicitly nor implicitly” force foreign investors and companies to transfer technologies
A positive sign for relations between China and the US – tech transfer has been a contentious issue. Let’s see how far this goes in resolving.
via Reuters , link here for more
Go to top