Written by Saqib Iqbal Ahmed
New York, October 26 (Reuters) – The US dollar rose modestly against a basket of currencies on Thursday. The U.S. economy grew at its fastest pace in nearly two years in the third quarter, data showed, again defying dire warnings of a prolonged recession starting in 2022.
GDP The Bureau of Economic Analysis of the Department of Commerce announced in its advance forecast of the GDP growth rate for the third quarter that the GDP growth rate for the previous quarter was an annualized rate of 4.9%, the fastest since the fourth quarter of 2021. Economists polled by Reuters had expected GDP to rise by 4.3%.
“It reinforces the message that the U.S. is somehow stuck economically and inflation remains somewhat stubborn,” said Brad Bechtel, global head of foreign exchange at Jefferies in New York.
“At the last minute, that supports the dollar,” Bechtel said.
The GDP figures were released based on business activity data released earlier this week that highlighted the strength of the US economy compared to the UK and the European Union.
“The strong third-quarter GDP results reflect market tensions between positive indicators on the one hand and interest rate hikes and a tougher outlook from the Fed on the other,” Brian Rose, senior U.S. economist at UBS, said in a note. “We are strengthening this,” he said.
“Market volatility is likely to continue until investors are confident that the economy is cooling but not collapsing and that the interest rate shock is over,” Rose said.
on the other hand, european central bank On Thursday, the central bank left interest rates unchanged as expected, ending an unprecedented 10th consecutive hike, while insisting talk of cuts was premature.
“This statement is very similar to the statement from September. Obviously they had to acknowledge the fact that inflation had fallen, which was what they expected, but at the end of the day they still They’re trying to hold on to some kind of hawkish bias that inflation is continuing to be ‘too high,”’ said Francesco Pesole, a foreign exchange strategist at ING in London.
Minister of Finance of Japan Shunichi Suzuki Authorities said they were closely monitoring the move and warned traders not to sell the yen again. He did not comment directly on possible intervention.
Pressure is mounting on the Bank of Japan to change government bond yield rules next week following a recent rise in global interest rates.
Japan’s low yields have made the currency an easy target for short selling and financing deals, and the widening gap in interest rates between Japan and the U.S. has helped keep the yen weak.
Jefferies’ Bechtel said whether Japanese authorities intervene in the foreign exchange market will depend not only on the level of yen trading but also on yen volatility. The Bank of Japan is scheduled to hold a financial meeting on October 30-31.
“Maybe they’re just waiting for that event to go away,” Bechtel said.
The governor of Australia’s central bank said on Thursday that Australia’s unexpectedly high inflation rate on Wednesday was close to what policymakers expected, and that the bank was still considering whether a rate hike was justified.
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Dollar leads in front of ECB https://tmsnrt.rs/46BXLZT
(Reporting by Saqib Iqbal Ahmed; Additional reporting by Samuel Indik in London and Ankur Banerjee in Singapore; Editing by Edwina Gibbs, Lincoln Feast, Deborah Kibrikosios, Jonathan Oatis and Diane Craft)
((saqib.ahmed@thomsonreuters.com; @SaqibReports; +1 332 219 1971; Reuters Messaging: saqib.ahmed.thomsonreuters.com@reuters.net))
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