Markets await US GDP and durable goods data

Markets await US GDP and durable goods data

In what is likely to be the last trading day for the year with significant data releases, the North American trading session will see major fundamentals being released ahead of the holiday season.

GDP data from Canada and the US are expected to be released with consensus calling for a weaker GDP growth for Canada at 0.1%, and a hawkish view on the US GDP with expectations a bit to the upside of 4.3% growth, up from 3.9% seen during the second GDP revision for the third quarter.

The US Q3 GDP should it manage to meet estimates will be one of the strongest quarters of growth in the US economy since Q1 of 2006, where the GDP rate grew at 4.9%. In the event the actual GDP reading fails to meet the estimates, overall, the trend growth trend for the third quarter in the US will continue to remain strong, something which the markets will definitely consider ahead of the release.

Simultaneously, the durable goods orders for November will be released which is expected to rebound at a sharp pace since March riding on the back of Boeing’s orders, which reported new orders of 224 new jets last month, up from 46 in October. Purchase of automobiles is also expected to help push the durable goods orders as sales rose 17.1 million, the highest since January 2006.

The current market expectations for durable goods orders is likely to show a rise of more than 3% after orders fell for three consecutive months previously.

Overall, the data from the US today should be broadly supportive of the Greenback which has been drifting higher despite lack of fundamentals in recent days. The US Dollar has been especially stronger against its weaker peers such as the Japanese Yen, the Aussie and Kiwi dollars and the British Sterling.

The Euro single currency which has been resilient against the Greenback despite the weaker fundamentals is likely to give into the downward pressure as consensus within the ECB is starting to show more and more governing council members in agreement for the Central bank to engage in sovereign and corporate bond purchases. This is likely to push the Euro to new multi-year lows against the Greenback.

Gold futures, which remained subdued continues to trade at the critical levels of 1200 – 1190 regions. A close to the upside could see Gold likely to test the highs towards 1250, while a decline below 1190 could likely see a bearish momentum build up into the precious metal with the eventual decline to $1000 becoming more evident.

Besides the GDP and Durable goods orders, other significant data includes the University of Michigan’s consumer sentiment and inflation expectations as well as new home sales data, which will be closely watched as yesterday’s existing home sales data declined by -6.1% worse than expected. Consensus is calling for the new home sales to be softer, rising 0.4%, down from 0.7% increase last month.