US Dollar Mixed Ahead of October Federal Reserve Meeting

The US dollar is trading mixed against multiple currencies on Tuesday ahead of the Federal Reserve kicking off its two-day October policy meeting where it is widely expected the central bank will cut interest rates for the third time in 2019. While the buck did find refuge in positive housing data, investors’ attention will be on quarterly gross domestic product (GDP) numbers, manufacturing data, and the October jobs report.

According to the National Association of Realtors (NAR), pending home sales advanced 3.9% in September compared to the same time a year ago. This represents the largest annual increase in contracts to purchase previously owned homes since December 2015. Higher sales were found across the country: south (5.7%), West (3.4%), Midwest (2.7%), and Northeast (1.3%).
The S&P CoreLogic Case-Shiller 20-city home price index climbed 2% year-on-year in August, accounting for the smallest annual gain since August 2012. The biggest price gains were situated in Phoenix (6.3%), Charlotte (4.5%), and Tampa (4.3%); the weakest increases were found in Seattle (0.7), New York (0.9%), and Los Angeles (1%).
The Mortgage Bankers Association (MBA)’s applications and 30-year rate for the week ending October 25 will be published on Wednesday.
Of course, financial markets will concentrate mainly on the US GDP growth rate for the third quarter on Wednesday, which is forecast to come in at 1.9%. If correct, growth would be nearly the same as the 2% gain in the second quarter. Two days later, the October jobs report will be released,  and analysts are projecting a gain of 120,000 new positions. September’s jobs surged 136,000.
The Conference Board’s US Consumer Confidence Index for October clocked in 125.9, falling short of the median estimates of 128. Although consumers remain confident in the US economy, the figure missed expectations, and that could be the beginning of a downward trend.
The Fed will be all over these numbers, and they will inevitably play a role in an interest rate decision. According to the CME Group FedWatch tool, the Federal Open Market Committee (FOMC) is expected to pull the trigger on a rate cut as traders are penciling in another quarter-point rate reduction. This would lower the target rate to a range of 1.5% and 1.75%.
This comes after Deutsche Bank released a new report that prognosticates that the greenback will soon peak, the Fed will cut rates three more times over the next two quarters, and the US economy will slump from 2.2% in 2019 to 1.5% in 2020.
The USD/CAD currency pair rose 0.31% to 1.3094, from an opening of 1.3055, at 19:29 GMT on Tuesday. The EUR/USD jumped 0.11% to 1.1112, from an opening of 1.1100.

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