Here is what you need to know on Friday, October 28:
The dollar holds its ground against its rivals early Friday with the US Dollar Index consolidating Thursday's strong recovery gains above 110.50. German Q3 Gross Domestic Product and October inflation data will be featured in the European economic docket alongside consumer and business sentiment surveys for the euro area. In the second half of the day, the Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred gauge of inflation, and September Pending Home Sales data from the US will be looked upon for fresh impetus.
On Thursday, the US Bureau of Economic Analysis' first estimate revealed that the US economy expanded at an annualized pace of 2.6% in the third quarter, compared to the market expectation of 2.4%, and helped the dollar gather strength. Meanwhile, the European Central Bank (ECB) decided to raise its key rates by 75 basis points as expected. During the press conference, ECB President Christine Lagarde refrained from committing to another over-sized rate increase but said that they were not finished with policy normalization. The ECB also noted in its policy statement that the depreciation of the euro has been adding to inflation but EUR/USD ended up snapping a five-day winning streak. Early Friday, the pair stays relatively quiet below parity.
ECB Quick Analysis: Five dovish things that down the euro, more may be in store.
During the Asian trading hours on Friday, the Bank of Japan (BoJ) announced that it left its policy settings unchanged, holding rates at -0.1% while maintaining the 10-year JGB yield target at 0.00%. In its Quarterly Outlook Report, the BoJ noted that risks to the economic outlook were skewed to the downside amid heightened concerns over developments in exchange rates and international commodity prices. Commenting on the JPY movements, BoJ Governor Kuroda reiterated that they won hesitate to ease the monetary policy further if necessary. USD/JPY failed to make a decisive move in either direction and was last seen trading little changed on the day at around 146.50.
Although the British pound managed to stay relatively resilient against the greenback, GBP/USD closed in negative territory on Thursday. Early Friday, the pair trades with modest daily losses above 1.1500.
Gold staged a rebound despite the broad dollar strength during the American trading hours on Thursday as the benchmark 10-year US Treasury bond yield fell below 4%. XAU/USD, however, failed to build on Thursday's gains early Friday and was last seen trading in negative territory below $1,660.
The souring market mood weighed on Bitcoin and BTC/USD lost more than 2% before going into a consolidation phase slightly above $20,000 early Friday. After having gained more than 10% earlier in the week, Ethereum turned south and fell 3.4% on Thursday. At the time of press, ETH/USD was fluctuating in a narrow range at around $1,500.
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