- The single currency stood out as one of the worst performers in the G10 complex in overnight trading as it fell 0.25% against the greenback, down to 1.0957
- US economy grew at an annualised pace of 2.9% in Q3, beating median forecast of 2.6% and 1.4% in Q2
- Japan: industrial production and retail sales came in on the soft side as the economy struggles to gain momentum in spite of continued efforts from the BoJ to stimulate growth and inflation against the backdrop of a strong yen and weak global demand
The better-than-expected growth figures from the US gave a fresh boost to the greenback, substantially raising the likelihood of a tightening move by the Federal Reserve as soon as December. The single currency stood out as one of the worst performers in the G10 complex in overnight trading as it fell 0.25% against the greenback, down to 1.0957. The US economy grew at an annualised pace of 2.9% in the third quarter, beating median forecast of 2.6% and 1.4% in the second quarter. The growth rebound came on the back of rising inventories and booming exports. For the first time since Q1 2015, inventories contributed to growth as it jumped 0.61% in the September quarter. Exports rose 1.17% compared to 0.21% in the previous quarter. On the other hand, personal consumption eased to 1.47% from 2.88% in the June quarter. All in all, the dollar index rose 0.15% on Monday.
In Japan, industrial production came in on the soft side in September, rising 0.9%y/y versus 1.9% expected. On a month-over-month basis, the industrial output was unchanged compared to the previous month, while market participants were expecting a modest increase of 0.9%. Retail sales also came on the soft side, contracting 1.9%y/y versus -1.8% median forecast. All in all, the Japanese economy has been struggling to gain momentum in spite of continued efforts from the BoJ to stimulate growth and inflation as the strong yen and weak global demand have hurt the economy. On Monday, the BoJ began a two-day monetary policy meeting during which it will review its growth and inflation outlook. After sliding to 104.27 in early session, USD/JPY returned at around 104.95 on further dollar gains. The bias remains on the upside. A key resistance can be found at 107.49, while on the downside a support lies at around 103 (previous lows).
Asian equities were losing ground across the board with the Japanese yen down 0.12%, while the broader Topix index was left unchanged at 1,393 points. In mainland China, the Shanghai and Shenzhen Composite were down 0.12% and 0.08% respectively. Offshore, the Hang Seng slid 0.06%, while the Taiex was of 0.18%. Consequently, European equity futures were also wearing red on Monday as traders could not find a good reason to lift share prices higher.
Today traders are awaiting the unemployment rate from Germany; retail sales from Spain; mortgage approvals from UK; inflation report from the euro zone and Italy; trade balance from South Africa; personal spending, personal income, PCE deflator, Dallas Fed manufacturing index and Chicago purchasing manager index from the US.