Thursday, 29 Oct 2009

Will American GDP Disappoint and Booost Safety of USD?

Following Monday's surprising U.S. housing figures, as well as a continuing decline in the American consumer confidence rating, the Dollar seems poised to retain its status as a safe haven currency for investors and traders. The 3.6% drop in single-family home sales in September, combined with less than stellar consumer confidence, did not help the image that the U.S. is recovering from the current recession. This in turn helped the dollar make continuous gains against the Euro throughout the week.

All eyes are currently focused on the impending U.S. GDP report set to be announced at 12:30 GMT. With most analysts predicting a 3.2% growth rate in the third quarter, expect the Dollar to level off against the Euro. Conversely, anything less then 3.2% could fuel fears about the pace of economic recovery, sending investors to rely on the greenback as a safe bet.

In addition, the Yen has also retained its reputation for stability, making impressive gains against both the Australian and New Zealand Dollar in trading on Thursday. With lower then expected domestic inflation data coming out of Australia this week, expect the Yen to continue to rise as investors revert back to more stable currencies.