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October 26, 2023

GDP Beats Expectations By A Long Shot

Frank Cabibi

GDP numbers came in twice as hot as the previous report and higher than expectations. Resilient economic growth is concerning with fears of the dollar continuing to strengthen. Stock indices gapped lower as the dollar recovers from the initial dip this morning.

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EdgeFinder Analysis

GU is the most bearish score output on the EdgeFinder right now. Today's GDP news helped propel dollar strength. Higher than expected numbers is concerning for GU bulls as the Fed keeps a keen eye on the growing economic projections.

If the Fed has to step in again, it could detrimental to the currency pair. Retail is majority long this pair while COT is the stark opposite. The two key components driving score right now are the weak trend reading and the stronger labor market in the US.

After some decent earnings, the market can't find any strength to the upside. Yields are falling as well, but the dollar is rising. Because the index gapped lower on the open under a strong level of support, price action looks increasingly bearish.

Despite where the NAS moves today, we may have to watch out for the index to come down to complete its move to the 200 DMA. Obviously, no one knows what to expect, but the technicals are at least lining up with a lower move to the downside, for now.

USDCAD is in the top setups as our strongest USD currency pair. The US beats CAD in GDP growth, Manufacturing PMI and retail sales. So, the loonie is swept is every economic category. The only factor, however, leaning towards CAD bullishness in the most recent change in COT.

The next couple months left in the year also point to higher moves in the pair. Only a fourth of retail is long this pair while the rest is majority short. This is a very mixed and uncertain market around the dollar, and indices, and large price swings are expected to continue.

Retail Spotlight

All of retail is short the dollar it seems while being neutral on the indices. AU, USDCHF and NU are the top most bought from the retail side. This is a bearish outlook for those pairs according to the EdgeFinder. Meanwhile, pairs like USDJPY and USDCAD would be marked as bullish readings.

Fundamental Spotlight

Here is the economic study on EURUSD. With a highlight on the GDP study, we can see that there is a lower GDP in the USD. However, what advanced GDP showed us today could be a sign that next quarterly GDP will be higher than 2.1%, and possibly by a substantial amount.

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