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Forex News: Upbeat GDP Data Buoys Dollar; Fed Decision In

Upbeat GDP Data Buoys Dollar; Fed Decision In Focus

10/30/2019 - 09:54:00 (RTTNews)

(RTTNews) - The U.S. dollar gained ground against its most major counterparts in the European session on Wednesday, as the economy expanded at a faster rate than expected in the third quarter and investors awaited the outcome of the Fed meeting that is expected to deliver another rate cut.

Data from the Commerce Department showed that real gross domestic product increased by 1.9 percent the third quarter after climbing by 2.0 percent in the second quarter. Economists had expected GDP growth to slow to 1.7 percent.

The stronger than expected GDP growth reflected positive contributions from consumer spending, government spending, residential fixed investment, and exports.

Data from payroll processor ADP showed that U.S. private sector employment increased slightly more than anticipated in October.

ADP said private sector employment climbed by 125,000 jobs in October compared to economist estimates for an increase of about 120,000 jobs.

The Fed is expected to reduce its policy rate for the third consecutive month when it concludes its two-day meeting today.

The Fed announcement is due at 2:00 pm ET, followed by a press conference with Powell at 2:30 pm ET.

The U.S. central bank is likely to lower interest rates by 0.25 percentage point, taking it to between 1.50 percent and 1.75 percent.

The currency held steady against its major opponents in the Asian session. The greenback reached as high as 108.97 against the yen, up from a low of 108.81 seen at 8:30 pm ET. The currency is seen locating resistance around the 111.00 level.

Data from the Ministry of Economy, Trade and Industry showed that Japan retail sales climbed 9.1 percent on year in September - exceeding expectations for an increase of 6.0 percent following the 1.8 percent gain in August.

On a seasonally adjusted monthly basis, retail sales spiked 7.1 percent - again topping expectations for 3.5 percent and up from 4.6 percent in the previous month.

After falling to a 6-day low of 1.1127 against the euro at 6:30 am ET, the greenback reversed direction, rising to 1.1102. On the upside, 1.09 is likely seen as the next resistance level for the greenback.

Data from the Federal Employment Agency showed that German unemployment increased and the jobless rate remained unchanged in October.

The number of unemployed increased by a seasonally adjusted 6,000 after falling 9,000 in September. Economists had forecast a monthly rise of 3,000.

The greenback bounced off to 0.9943 against the Swiss franc, following a 5-day decline to 0.9915 at 6:30 am ET. The currency may possibly challenge resistance around the 1.01 mark.

The greenback touched the key 1.31 level against the loonie. The pair had finished Tuesday's trading at 1.3087. Next immediate resistance for the greenback is seen around the 1.33 level.

Having dropped to an 8-day low of 0.6876 against the aussie at 5:45 am ET, the greenback changed course and recovered to 0.6854. The next possible resistance for the greenback is found around the 0.65 level.

The greenback ticked up to 0.6342 against the kiwi, from a low of 0.6369 it touched at 9:00 pm ET. The greenback is likely to face resistance around the 0.62 region, if it gains again.

The greenback held steady against the pound, after having dropped to 1.2905 at 4:00 am ET. At yesterday's close, the pair was worth 1.2867.

Data from the British Retail Consortium showed that UK shop prices fell for the fifth consecutive month in October.

The BRC-Nielsen shop price index dropped 0.4 percent year-on-year in October due to continuing decline in non-food prices.

Looking ahead, the Bank of Canada announces its interest rate decision. Economists widely expect the central bank to maintain the benchmark rate at 1.75 percent at 10:00 am ET.

At 2:00 pm ET, the Fed announces its decision on interest rates. Economists widely expect the Fed to cut federal funds rate to between 1.50 percent and 1.75 percent.

For comments and feedback: contact editorial@rttnews.com

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