USD

The US dollar had a topsy-turvy trading day, as it gained ground when the US advanced GDP reading came in better than expected at 2.8% versus the estimate at 2.0% and the previous 2.5% reading. 

However, traders got hold of the underlying figures and realized that the economy wasn’t as strong as it appeared. As it turns out, much of the GDP increase was simply a result of an increase in stockpiles, which is likely to drop later on. Due for today is the non-farm payrolls figure, which is slated to show a weaker reading for October because of the recent government shutdown. 

EUR

The euro got blown out by the surprise rate cut by the ECB from 0.50% to 0.25%. This pushed EUR/USD to the 1.3300 handle before it rebounded to 1.3400 again when traders booked profits. Draghi said that the euro zone is likely to undergo a longer period of low inflation while economic risks remain to the downside. He also reiterated that the ECB has enough easing measures left to implement if necessary. As for exchange rates, he said that there has been no mention of the euro in their latest meeting. Medium-tier reports, such as German trade balance and French consumer spending, are due today. 

GBP

The pound was able to stay afloat when the BOE decided to keep monetary policy unchanged. In fact, pound pairs barely had any reaction to this expected result, as traders would rather wait for the minutes of their monetary policy meeting later on. Although GBP/USD declined sharply when the US showed a strong GDP reading, the pair was able to make a quick recovery. The UK is set to print its trade balance today but this isn’t likely to have a strong effect on GBP/USD compared to the NFP. 

CHF

The franc lost ground to the dollar when the ECB decided to cut interest rates but resistance at the .9200 levels held for USD/CHF and the pair quickly retreated when the underlying figures of the US GDP weren’t so strong. Swiss SECO consumer climate was weaker than expected as the reading came in at -5, short of the -2 consensus. Swiss retail sales are due today and the annual figure is expected to improve from 2.4% to 2.6%. 

JPY

The yen had a volatile trading day, as USD/JPY spiked above 99.00 on the heels of strong US GDP but fell back below 98.00 right away. Against the euro, the yen was able to post a lot of gains when the ECB cut rates. There were no reports released from Japan yesterday and none are due today so yen pairs could stay sensitive to country-specific data and risk sentiment. 

Commodity Currencies (AUD, NZD, CAD)

The comdolls gave up some ground to the dollar, which was boosted by a strong US GDP figure. However, these losses were quickly erased and the comdolls managed to hold on to their previous levels. Earlier today, a downbeat RBA statement weighed on the Australian dollar as policymakers decided to downgrade their growth forecasts for 2014. Up ahead, Canada is set to print its employment change report and jobless rate, as weaker than expected readings could push USD/CAD up the charts. 

By Kate Curtis from Trader’s Way