Another USD Buying Spree, But Gains Limited

Daily FX Wrap: Another USD buying spree, but gains limited despite better than expected US Q3 GDP print. A good day for GBP as Cable tests above 1.2500 again.

A lively session in FX, where once again we have seen the USD on the front foot, but perhaps a clearer sign that the moves are overextended – in the near term at least. The data focus was on the preliminary (second) reading of US Q3 GDP, but having rallied into the number, the stronger than expected 3.2% read (vs 3.0% expected, and up from 2.9%) failed to generate a significant USD move, extending the daily gains before retracing back towards mid range. EUR/USD tested the mid 1.0500’s, but was contained ahead of the 1.0550 level to recover back through 1.0600.

Into the London close, we trade 1.0625, while USD/JPY is comfortably back below 113.00 after trading up to highs a little past 113.30. This was from a low of 111.65 seen in the overnight session, and we may well retest these lows unless we can reclaim 113.50 higher up. USD/CHF continues to find resistance ahead of 1.0200, but this does not seem to be deterring dip buyers.

Elsewhere, it has been a good day for GBP, with a very brief look under 1.2400 in Cable developing into a rally which eventually took out 1.2500 on the upside. Resistance from 1.2550-1.2600, but with EUR/GBP having led much of the move, this all depends on cross rate demand in the mid 0.8400’s.

Wednesday will prove interesting, as month end flow may have yet to kick in, with the usual European bank buying potentially causing a squeeze at some point. OPEC watching has led to a number of headline based moves in oil, largely to the downside, with a mix of views on whether the meeting will end successfully.

USD/CAD continues to tread water in the 1.3400’s a result. Against this, NZD/USD has pushed up through .7100, with AUD/NZD now under 1.0500. AUD/USD also found a late bid in the day, but continues to struggle ahead of .7500, coinciding with copper topping out.

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