Muted Reaction to US Data ahead of FOMC
Joe Perry October 30, 2019 2:41 PM
Earlier today, we had ADP, Preliminary GDP, and Inflation data.
Today at 2:00pm EST, we will be the FOMC interest rate decision. As discussed in our FOMC Preview, the market is almost fully pricing in a 25bps cut today. Powell’s press conference will be the main act today. However, ahead of the FOMC, this morning we had the ADP Non-Farm Employment Change for October, Preliminary GDP data for Q3, and Inflation data.
The headline number for ADP was slightly better than expected at 125K vs 120K expected. However, with the revision lower in September’s data, from 135K to 93K, this was a worse number. The Preliminary GDP headline number was stronger than expected at 1.9% vs 1.6% expected and 2.0% last. However, the GDP Price Index (also known as the GDP Deflator), which is a measure of inflation, was 1.6% vs 1.9% expected and 2.6% last. This number shows that inflation is slowing in the US compared to Q2. In addition, PCE Prices (QoQ) were released. This is one of the Fed’s favorite measures of inflation. The Advanced Q3 number was 1.5% vs 2% expected and 2.4% last. However, the Core PCE Prices number (ex- food and energy) was 2.2% vs 1.9% expected and 2.1% last. In theory, these numbers show that inflation is meeting Fed expectations, not including the more volatile food and energy prices.
USD/JPY tends to be highly sensitive to economic data releases. Upon release of the data, the pair bounced a mere 15 pips and formed a shooting star candlestick on the 15-minute chart. Short-term resistance at yesterday’s highs of 109.06. Short term support at yesterday’s lows near 108.75.
Source: Tradingview, FOREX.com
With the exception of the Canadian Dollar (as the BOC was more dovish than expected), barring any headlines from the usual suspects, the currency markets could remain muted until the FOMC meeting later this afternoon. Keep an eye on the press conference at 2:30pm!
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.