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GDP expanded more than expected, signalling decreasing inflation


U.S. equities were mixed throughout yesterday’s trading. The Dow Jones Industrial Average gained 0.61% to close at 32033.28. The S&P 500 lost 0.61% to close at 3807.3. The tech-heavy Nasdaq Composite plunged 1.63% to close at 10792.68. The Dow Jones Industrial Average was able to close higher on Thursday after new data showed third quarter GDP grew faster than expected and hinted at waning inflation, encouraging some dip buying. Better-than-expected corporate earnings from McDonald’s and Honeywell led the Dow higher. The technology sector continues to take show signs of weakness as Amazon reported Q3 earnings, which came in below consensus estimates; furthermore, Amazon has lowered its Q4 forward guidance to a forecasted 2% growth instead of the 8%, projected during the earlier part of the year.

Apple delivered fiscal 2022 fourth-quarter earnings on Thursday as well. The tech giant delivered an earnings beat. Q4 EPS came in at $1.29, compared to the $1.27 analyst estimate. Revenue for Q4 was up 8.1%, year over year. Despite delivering a surprising earnings beat, Apple did not guide on its first fiscal quarter, which ends in December and contains Apple’s biggest sales season of the year. Apple’s CEO, Tim Cook, has also cited the volatile foreign exchange market, which saw the Dollar soaring against all currencies, as a headwind that significantly reduced Apple’s Q4 performance.

The benchmark 10-year treasury yield has continued to retreat below 4%. The index was last seen trading at 3.922%.

U.S. GDP(QoQ) of Q3, 2022 will be announced on Thursday, Oct 27, given the persistently challenging environment, with historically high energy costs and rapidly rising interest rates, as the very high inflation, especially in food and household costs, we have less optimistic about GDP forecast.

Main Pairs Movement

The Dollar index rose 0.06% throughout yesterday’s trading. The better-than-expected U.S. Q3 GDP provided a boost to the U.S. Greenback. However, the initial jobless claims figures, which came in below market consensus at 217K, countered some of the gains as market participants interpreted the figure as a sign of a slowdown in the economy.

EURUSD lost 1.15% throughout yesterday’s trading. The ECB announced a 75 basis point interest rate hike on all three of its leading rates, but the accompanying economic outlook, provided by the ECB, weighed on the Euro.

GBPUSD lost 0.48% throughout yesterday’s trading. Higher demand for the Dollar worked against the Pound. Cable was last seen trading just below the 1.16 level.

Gold dropped 0.11% throughout yesterday’s trading. The non-yielding metal fared worse against the rising Dollar as short-term interest rate expectations continue to rise.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
JPYBOJ Monetary Policy StatementTentative 
JPYBOJ Outlook Report (YoY)Tentative 
JPYBOJ Press ConferenceTentative 
EURGerman GDP (QoQ) (Q316:00-0.2%
RUBInterest Rate Decision (Oct)18:307.50%
EURGerman CPI (YoY)20:0010.1%
USDCore PCE Price Index (MoM) (Sep)20:300.5%
CADGDP (MoM) (Aug)20:300.1%
USDPending Home Sales (MoM) (Sep)22:00-5.0%
EURECB President Lagarde Speaks22:15