The dollar continued to march higher on Friday following the release of the strong GDP data although by the end of the session some profit taking had set in, after a headline suggested that Trump is leaning towards Powell and not Taylor as the next Fed Chair, and most currencies staged a partial recovery. The USQ3 GDP grew a solid 3.0% annualised, beating expectation of 2.6% while the GDP price index rose 2.2%, much higher than the previous quarter’s 1.0% and expectation of 1.8%, leaving a December rate hike more likely than ever. The Euro remains heavy on the back of the Spanish tensions and some safe haven buying ahead of the weekend saw renewed demand for the Yen and the Chf. In other markets, stocks ended higher again, driven by the larger tech stocks that pushed the NASDAQ up 2.2%. Some safe-haven buying helped Gold push a little higher, while WTI rallied by 2.4% after Saudi Arabia and Russia declared their support for extending the OPEC-led deal to cut supplies for another nine months.
It will be a big week ahead, with plenty of action on most days. Monday’s highlights will be the German CPI, Retail Sales and the US Personal Consumption/Expenditure Price Index, while Tuesday has the BOJ Meeting, EU Q3 GDP and October CPI and the UK Inflation Report Hearing. Wednesday sees the ISM Mfg PMI/Prices Paid and the FOMC Meeting, while Thursday will have the German Unemployment and the BOE Meeting/Statement/Minutes/Vote Count/APP Facility at which a rate hike is generally expected. The week will end with another busy session, with the Jobs/NFP/Average Hourly Earnings data (exp +300K, 4.2%). Also of note will be the global PMIs, scattered through the week, while the the NZ Unemployment is due Wednesday, as is the ADP Jobs data in the US session. The Australian and Building Permits will be on Thursday, ahead of the Retail Sales on Friday.
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