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The American economy grew by 3.0% (annualized) in the third quarter according to the BEA's advance estimated, ahead of consensus forecast for 2.6%.

Consumer spending also came in ahead of expectations, rising by 2.4% (the median consensus estimate was 2.1%). The gain was led by spending on durable goods, which climbed +8.3%. Non-durable goods spending rose 2.1%, while services spending inched up 1.4%. The services category was likely negatively impacted by hurricane activity.

Business investment had another decent quarter, rising by 3.9%, even as non-residential structures fell 5.2%. The gain was led by equipment spending, which rose 8.6%, while spending on intellectual property products rose 4.3%

Residential construction also fell 6.0%. Both residential and non-residential structures categories were impacted by disruptions related to Hurricanes Harvey and Irma.

Net exports added 0.4 percentage points to real GDP growth. Exports rose 2.3% while imports fell 0.8%. Imports may have been delayed by hurricanes and this is one area where there could be modest give back in the quarter ahead.

Inventory investment also made a significant contribution to growth, adding 0.7 percentage points to the headline figure.

Key Implications

Even with two major hurricanes making landfall in the United States, the economy made significant progress in the third quarter. Outside of the areas directly impacted by the hurricanes, there are few signs of weakness in this report.

With rebuilding likely to boost economic growth in the fourth quarter, there is a good chance that yet another quarter of 3% growth is in store. This is well-above the economy's potential rate (around 2.0%) and is consistent with ongoing declines in the unemployment rate, which, at 4.2% is already below its estimated long-run level.

Score one for the hawks on the Federal Open Market Committee. The FOMC may hold on raising rates at its meeting next week, but with such broad-based economic strength, a hike in December is near certain at this point.

Daily Pivots: (S1) 113.52; (P) 113.79; (R1) 114.26; More...

Focus remains on 114.49 resistance in USD/JPY. Decisive break there will confirm that correction pattern from 118.65 has completed at 107.31 already. And USD/JPY should then target a test on 118.65. And in any case, outlook will remain cautiously bullish as long as 111.64 support holds.

In the bigger picture, medium term rise from 98.97 (2016 low) is not completed yet. It should resume after corrective fall from 118.65 completed. Break of 114.49 resistance will likely resume the rise to 61.8% projection of 98.97 to 118.65 from 107.31 at 119.47 first. Firm break there will pave the way to 100% projection at 126.99. This will be the key level to decide whether long term up trend is resuming.

Daily Pivots: (S1) 1.1582; (P) 1.1709 (R1) 1.1779; More...

EUR/USD reaches as low as 1.1587 so far and intraday bias remains on the downside. Fall from 1.2091 should target 38.2% retracement of 1.0569 to 1.2091 at 1.1510 next. At this point, such decline is still viewed as a correction. Hence, we'd expect strong support from 1.1510 to bring rebound, at least during first attempt. However, firm break there will bring deeper decline to 61.8% retracement at 1.1150. On the upside, above 1.1643 minor resistance will turn intraday bias neutral first. But near term outlook will remain bearish as long as 1.1879 resistance holds.

In the bigger picture, rise from medium term bottom at 1.0339 is not finished yet. It's expected to continue after pull back from 1.2091 completes. And, next target will be 38.2% retracement of 1.6039 (2008 high) to 1.0339 (2017 low) at 1.2516. However, it should be noted that there is no confirmation of trend reversal yet. That is, such rebound from 1.0399 could be a correction. And the long term fall from 1.6039 (2008 high) could resume. Hence, we'd be cautious on strong resistance from 1.2516 to limit upside.

Daily Pivots: (S1) 1.3110; (P) 1.3195; (R1) 1.3244; More....

At this point, GBP/USD is still staying above 1.3026 support. Intraday bias remains neutral as consolidation from 1.3026 could still extend with another rise. Nonetheless, on the downside, firm break of 1.3026 will resume the decline from 1.3651 and target 1.2773 key support level. This will also revive the case of medium term reversal. On the upside, in case of another rally, upside should be limited by 61.8% retracement of 1.3651 to 1.3026 at 1.3412 to bring fall resumption finally.

In the bigger picture, while the medium term rebound from 1.1946 was strong, GBP/USD hit strong resistance from the long term falling trend line. Outlook is turned a bit mixed and we'll stay neutral first. On the downside, decisive break of 1.2773 key support will argue that rebound from 1.1946 has completed. The corrective structure of rise from 1.1946 to 1.3651 will in turn suggest that long term down trend is now completed. Break of 1.1946 low should then be seen. On the upside, break of 1.3835 support turned resistance will revive the case of trend reversal and target 38.2% retracement of 2.1161 (2007 high) to 1.1946 (2016 low) at 1.5466.

Daily Pivots: (S1) 0.9909; (P) 0.9944; (R1) 1.0012; More....

USD/CHF's rally accelerates to as high as 1.0037 so far today. 61.8% retracement of 1.0342 to 0.9420 at 0.9990 is firmly taken out. Intraday bias remains on the upside for 1.0099 resistance first. Break will pave the way to 1.0342 key resistance level next. On the downside, below 0.9980 minor support will turn intraday bias neutral first. But retreat should be contained by 0.9835 resistance turned support and bring another rally.

In the bigger picture, current development suggests that USD/CHF has defended 0.9443 (2016 low) key support level again. Rise from 0.9420 could develop into a medium term move and target a test on 1.0342 high. This represents the upper end of a long term range that started back in 2015. On the downside, break of 0.9736 support is now needed to indicate completion of the rise from 0.9420. Otherwise, further rally will remain in favor in medium term.

Dollar's rally extends in early US session after stronger than expected data. GDP grew a solid 3.0% annualized in Q3, beating expectation of 2.6%. More importantly, taking into consideration of the impacts of the hurricanes, growth was just 0.1% below prior quarter's 3.1% annualized. That's very impressive. Meanwhile, GDP price index rose 2.2%, much higher than prior quarter's 1.0% and expectation of 1.8%. barring any disastrous developments ahead, a December rate hike now seems more likely than ever. And indeed, based on yesterday's pricing, fed fund futures were already indicating 95.2% chance of another 25bps hike in federal funds rate to 1.25-1.50%.

Technically, Dollar is set to end as the strongest major currency for the week. EUR/USD's break of 1.1669 support yesterday should now extend the fall from 1.2091 high to next key fibonacci level at 1.1510. USD/JPY could now take on 114.49 key resistance today. Firm break there will be a strong indication of medium term rise resumption for 118.65 and above. Euro has been soft since yesterday's post ECB decline. But still, the common currency is trading up against Swiss Franc and commodity currencies for the week, not too bad.

Elsewhere, German import price rose 0.9% mom in September. Japan national CPI core was unchanged at 0.70% yoy in September, in line with consensus. Tokyo CPI core rose to 0.6% yoy in October, above expectation of 0.5% yoy. Australia PPI rose 0.2% qoq, 1.6% yoy in Q3.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9909; (P) 0.9944; (R1) 1.0012; More....

USD/CHF's rally accelerates to as high as 1.0037 so far today. 61.8% retracement of 1.0342 to 0.9420 at 0.9990 is firmly taken out. Intraday bias remains on the upside for 1.0099 resistance first. Break will pave the way to 1.0342 key resistance level next. On the downside, below 0.9980 minor support will turn intraday bias neutral first. But retreat should be contained by 0.9835 resistance turned support and bring another rally.

In the bigger picture, current development suggests that USD/CHF has defended 0.9443 (2016 low) key support level again. Rise from 0.9420 could develop into a medium term move and target a test on 1.0342 high. This represents the upper end of a long term range that started back in 2015. On the downside, break of 0.9736 support is now needed to indicate completion of the rise from 0.9420. Otherwise, further rally will remain in favor in medium term.

Economic Indicators Update

GBPJPY has been underperforming in the past two days, breaking back below the key 150.00 level. When looking at the bigger picture the pair lacks a clear trend and has been consolidating after its rally from 141.34 stalled at 152.85.

On the 4-hour chart, prices rebounded off the lower Bollinger band around 149.00 but based on technical indicators, momentum is too weak to provide a sustained move higher. RSI is below 50 and MACD is flat.

If price action remains above 149.00 (immediate support), there is scope to test 150.00. Clearing this key level would see additional gains towards 151.50. This is considered to be a strong resistance area which has been rejected a few times in the past. Rising above it would see prices re-test the 152.85 peak and then from there above there would be a resumption of the uptrend form 141.34.

If 149.00 support fails, then the focus would shift to the downside towards 147.00. This level is the 50% Fibonacci retracement level of the upleg from 141.34 to 152.85 and thus is an important level, which if breached, would increase downside pressure and bring about a reversal of the trend. From here, GBPJPY would be on the path towards the 141.343 low.

Overall, GBPJPY has been neutral since peaking at 152.85. Near-term weakness is expected to remain as long as price action take place in the lower end of the Bollinger band.

The euro continues to fall against the U.S dollar during the early European trading, with the EURUSD hitting a fresh-low of 1.1615. Broad based strength in the U.S dollar index and fears of escalating protests in Catalonia over the weekend are adding to the euros woes on Friday. Currently the EURUSD pair trades around the 1.1620, ahead of the release of third fiscal quarter GDP figures from the U.S economy.

Should intraday EURUSD sellers push price-action back below the 1.1615 level during the U.S session, a further decline 1.1610 and 1.1580 should be expected.

If EURUSD buyers can push price-action back above the key 1.1660 level, the euro will likely move to test its 100-day moving average, at 1.1679 and the 2015 price high, at 1.1713.

The British pound remains strongly bearish against the U.S dollar, as selling pressure continues to build during the European trading session. The GBPUSD pair has fallen as low as 1.3070, as broad-based U.S dollar strength dominates the trading theme on Friday. Price-action currently trades just below the 1.3100 level, ahead of the release of key third quarter GDP data from the U.S economy.

The GBPUSD pair remains strongly bearish on an intraday basis while trading below the 1.3115 technical level. Sellers will likely target the 1.3070 and 1.3040 levels while the pair continues trades below the 1.3115 level.

If GBPUSD buyers can push price-action above the 1.3115 level for a sustained period, further upside can be expected towards 1.3135 and 1.3157.

The Canadian dollar continues to lose ground this week. In the Friday session, USD/CAD is trading at 1.2884, up 0.30% on the day. On the release front, there are no Canadian releases on the schedule. The US releases Advance GDP and the UoM Consumer Sentiment.

It has been a dismal week for the Canadian dollar, which has dropped 2.0 percent. The Canadian dollar lost more ground against the greenback on Thursday, after the ECB lowered its asset-purchase program, from EUR 60 billion to 30 billion/mth. The US dollar gained ground after dovish remarks from Mario Draghi. The ECB president said that the program would remain open-ended, which allows the ECB to extend QE beyond September 2018. Many investors were hoping that the ECB would be more hawkish and announce a termination date for the scheme.

There were no surprises from the Bank of Canada this week, as the Bank maintained the benchmark rate at 1.00 percent. In its rate statement, the Bank noted that wage growth levels remain weak, as there is slack in the labor market. Inflation pressure from wage growth remains muted, but the Bank did not provide a reason why inflation levels are so low. This problem is apparent south of the border as well, where a robust US economy and red-hot labor market has not translated into higher inflation. The cautious tone of the BoC did not impress investors, and the Canadian dollar shed close to 1.0 percent on Wednesday after the rate announcement.

All eyes are on the US Advance GDP release, which should be treated as a market-mover. The markets are forecasting a gain of 2.5%, after Preliminary GDP posted a sharp gain of 3.0%. US economic numbers remain strong, and the labor market is close to capacity. Despite the strong economy, inflation has not moved higher, and wage growth has been weaker than expected. The Federal Reserve remains perplexed by the lack of inflation, but Janet Yellen and other FOMC members have said that they expect inflation levels to move higher in the near future. The markets are convinced that the Fed will press the rate trigger in December, as the odds of a rate hike have soared in recent weeks. Currently, the likelihood a December hike is at 96%, according to CME FedWatch.