What to watch for on Thursday, October 27:
Another busy day ended with the dollar american collapsing against its main rivals. The EUR/USD pair regained parity and is approaching 1.ñ.0100 before the publication of the preliminary estimate of the US Gross Domestic Product for the third quarter and the monetary policy decision of the European Central Bank.
GBP/USD is trading around 1.1630, despite some fiscal turmoil in the UK. On Wednesday, Chancellor Jeremy Hunt announced that the medium-term budget plan will be delayed until November 17. The new government is struggling with a fiscal hole of around £35bn. The delay was discussed with the governor of the Bank of England Andrew Bailey, according to Hunt. The BOE is set to announce its monetary policy decision next week, and market players are quickly reducing their bets on another big rate hike.
Meanwhile, news from China indicated that the country put under partial lockdown to Wuhan, where the coronavirus started
The Canadian dollar was the worst performer against the dollar. The Bank of Canada raised its benchmark interest rate by 50 basis points, missing market expectations of 75 basis points to 3.75%. Monetary policymakers pointed out that growing concern about a potential global economic downturn was behind this decision. USD/CAD is trading around 1.3560.
AUD/USD, meanwhile, rose towards 0.6500, despite worrying Australian inflation levels.
The USD/JPY pair continued to slide and is now trading around 146.30, while the USD/CHF dipped as low as 0.9864.
Gold rose, now at $1,665 a troy ounce, while crude oil prices rose, with WTI changing hands at $88.10 a barrel.
Wall Street closed mixed near its daily open, paring early gains. However, the dollar continued to be pressured by the relaxation of government bond yields.
Thursday will be quite a busy day as the US is expected to report that the economy grew in the three months to September. The preliminary estimate of Domestic Product Rough of the third trimester is expected at 2.4%, which represents a reversal of the negative trend of the previous two quarters. It will also mean that the country is no longer in a technical recession and could be read as an opportunity for the US Federal Reserve to maintain the aggressive pace of tightening, giving the dollar some room to recover. The country will also release Durable Goods Orders for September, which is seen as a modest 0.6% increase.
At the same time, the Central Bank European will announce its latest monetary policy decision. The central bank is expected to raise rates by 75 basis points, accompanied by a dovish message, as President Christine Lagarde and company seem unlikely to continue raising rates at such a remarkable pace.
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Source: Fx Street
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