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US Open Preview – Dollar modestly higher ahead of much-awaited US GDP report; European stocks in the green
July 27, 2018 11:26 amVideo
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Here are the latest developments in global markets:
Day ahead: US GDP in the spotlight
All eyes will be on the preliminary estimate of US GDP growth for the second quarter of the year due at 1230 GMT.
US economic growth is expected to have risen by 4.1% on an annualized basis in Q2, at a far higher pace relative to Q1’s 2.0% and at its quickest since Q3 2014. A better-than-expected reading is likely to be seen as more conclusively putting on the table two more 25 bps rate hikes by the Fed as the year unfolds – bringing the total number for the year to four –, thus supporting the dollar. A weak reading could on the other hand cause some profit-taking for the greenback. At the moment, Fed funds futures project that market participants have fully priced in an additional rate increase, while they see a 68% probability for a second one. In the meantime, advance data on core PCE prices for Q2 will be released alongside the numbers on GDP, while the University of Michigan’s final reading on consumer sentiment for the month of July will be hitting the markets at 1400 GMT; the relevant index is expected to be confirmed at 97.1, below June’s 98.2.
Mexican Economy Minister Ildefonso Guajardo’s visit to Washington, which included meetings with US Trade Representative Robert Lighthizer, will conclude today. Following constructive talks on trade between the US and the EU earlier this week, it will be interesting to see if positive momentum carries through into NAFTA talks, something which is likely to benefit the Mexican peso and the Canadian dollar.
In energy markets, oil traders will be keeping an eye on the Baker Hughes count of active US oil rigs due at 1700 GMT.
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