Market Drivers – US Session 27/10/2022

Mohamed Abdelhamid 28 October, 2022 3:29 am Forex Market, Market Update

The American dollar restores its previous weak tone, as US Treasury yields edged sharply lower following the release of the preliminary estimate of the Q3 Gross Domestic Product.

Important events are streaming on the macroeconomic calendar having less impact than anticipated, despite bringing about some new developments.

Wall Street got an unforeseen push higher ahead of the opening but finished the trading day with mixed performance with gains for Dow and southtrend for Nasdaq on the back of earnings reports.

The EUR was the worst performer against the US dollar after the ECB had announced its monetary policy decision. As broadly expected, ECB hiked the three main rates by 75 bps, but the message on growth and economic developments was most discouraging.

GBP/USD trades around 1.1570, marginally lower for the day. AUD/USD also shed some ground and hovers around 0.6460. The USD/CAD, on the other hand, trades little changed around 1.3550.

The US dollar also appreciated against the CHF, with the pair now trading at 0.9915, while USD/JPY pivots around 146.10 ahead of the Bank of Japan monetary policy decision.

Gold shed some ground but is little changed at around $1,660 a troy ounce, while crude oil prices ticked higher. WTI settled at $88.90 a barrel.

Economic Data

The Bureau of Economic Analysis reported that the economy grew at an annualized pace of 2.6% in the three months to September, better than anticipated.

Other Developments

ECB also introduced changes to the Targeted Longer-Term Refinancing Operations (TLTRO) III program, also meant to tighten financial conditions further. the interest rate on TLTRO III operations will be indexed to the average applicable key ECB interest rates over this period. The existing interest rate calculation method will be maintained for the period from the settlement date of each respective TLTRO III operation until 22 November 2022, albeit with indexing to the applicable key ECB interest rates ending on that date.

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