Dollar rises to three-month high vs. yen before pivotal U.S. GDP data
The dollar advanced to a three-month high against the yen on Friday, on track for monthly gains against most major currencies as investors waited for U.S. third-quarter growth data later in the day.
A solid number would give the Federal Reserve an opportunity to upgrade the economic assessment in the November statement and boost prospects for a December rate hike. It could also help reassure stock markets, which would be supportive of the dollar against the safe-haven yen, traders said.
A disappointing result, however, could trigger a fall in the dollar, a scenario that played out in late July when U.S. second-quarter gross domestic product data came in weak.
The median forecast in a Reuters poll is for the U.S. advance third-quarter GDP data to show growth of 2.5 percent, up from 1.4 percent in the previous quarter. ECONUS
Growth Rebound in U.S. Masks Less-Bright Picture of Demand
The U.S. economy’s third-quarter scorecard on Friday will probably show a notable pickup in growth following a sluggish first half. The caveat: It occurred without an acceleration in consumer and business demand.
Gross domestic product rose at a 2.6 percent annualized rate, according to the median estimate in a Bloomberg survey, after averaging 1.1 percent in the previous six months. With the biggest part of the economy -- consumer spending -- moderating, much of the projected pickup stems from a narrower trade deficit and a rebuilding of inventories. While a report Wednesday showed a gain in merchandise exports last month, a broad-based drop in imports indicated domestic demand weakened as the quarter drew to a close.
“The economy had a disappointing first half and now we’re getting back on our feet,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. Household purchases “are settling down after some boomy times,” and “all the acceleration is in net exports and inventories. The pace of growth, overall, remains slow.”
Oil prices set for weekly drop on doubts OPEC can coordinate output cut
Oil prices were steady on Friday, but on track for a weekly loss of more than 2 percent on uncertainty over whether OPEC would be able to coordinate a production cut big enough to curb a global glut that has dogged markets for two years.
Brent crude futures LCOc1 were at $50.48 per barrel at 0642 GMT (2:42 a.m. ET), up 1 cent from Thursday. U.S. West Texas Intermediate (WTI) CLc1 crude was down 1 cent at $49.71 a barrel. Both benchmarks hit their lowest in about three weeks on Wednesday and were headed for their biggest weekly drop since September.
Reference:Reuters,Bloomberg
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