What to watch for on Friday, October 28:
The major events that flood the macroeconomic calendar had a much smaller impact than expected, despite the fact that they did bring some interesting news. Overall, the US dollar maintains its previous weak tone as yields of Treasure of the USA fell considerably after the publication of the preliminary estimate of the Gross Domestic Product for the third quarter. The Bureau of Economic Analysis reported that the economy grew at a 2.6% annualized pace in the three months through September, better than expected.
Wall Street got an unexpected boost ahead of the open, but ended the day mixed on earnings reports.
The euro was the worst performing currency against the dollar, as the ECB announced its decision to monetary politics. As expected, the central bank raised all three main rates by 75 basis points, but the message on growth and economic developments was most discouraging. In one vein, policymakers expect inflation to remain high and growth to slow further. The next rate hikes will depend on the data and will be decided at each meeting. The only thing that is clear is that more hikes are needed to reach the ECB’s inflation target.
In addition, the ECB introduced changes to the Program of Long-Term Refinancing Operations for Specific Purposes (TLTRO)III, also intended to further tighten financial conditions. The interest rate of the TLTRO III operations will be indexed to the average of the key interest rates of the ECB applicable during this period. The current method of calculating interest rates will be maintained during the period between the settlement date of each of the TLTRO III operations and November 22, 2022, although the indexation to the applicable official ECB interest rates will end on that date.
GBP/USD is trading around 1.1570, slightly lower on the day. AUD/USD also gave up some ground and hovered around 0.6460. USD/CAD, meanwhile, is trading little changed around 1.3550.
The Dollar is also appreciating against the CHF, with the pair now quoting at 0.9915, while the USD/JPY pivots around 146.10 before the Bank of Japanmonetary policy decision.
Goldgave something up of land, but barely changed around $1,660 a troy ounce, while crude oil prices rose. WTI stood at $88.90 a barrel.
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Source: Fx Street
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