USD Falls as Geopolitics Subdue US GDP Data

The U.S. dollar edged down on Tuesday as investors piled into safe-haven currencies on concerns about rising tension between Russia and Turkey, shrugging off positive data on the U.S. economy.

The U.S. gross domestic product grew 2.1 percent in the third quarter, a healthier clip than initially thought, the government said.

The upward revision for GDP, one of the most important indicators of growth, could give the U.S. Federal Reserve the confidence to raise interest rates next month.

However, investors continued to favor the yen and Swiss franc, as they seemed more concerned with events in the Middle East where a Russian plane was shot down by Turkish forces near the Syrian border.

“That’s the thing with backward-facing data. It’s encouraging to see the improvement or the upgrade in growth, but it’s still a stale piece of data,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. “We’re talking about the third quarter, more of a rear-view mirror, so the markets are more concerned about (the fourth quarter) and looking forward.”

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza