American stock indices are declining. Dow Jones Industrial Average fell by 0.2%, S&P500 by 0.3% and Nasdaq Composite dropped by 0.65%. US 10-year treasuries have also declined. On Thursday their yield rose to 1.843% against 1.790% on Wednesday, which is close to the 5-month highs.
The USD is rising in the market. On Thursday, the USD approached the highs since March. The index WSJ, which shows positions of the USD against a basket of 16 currencies, has grown by 0.4% to 88.96. Since the beginning of October the index has grown by almost 3%. This is the highest closing level of the index since the beginning of March 2016.
The USD is supported by investors’ expectations of the interest rate hike by the US Fed in December.
On Friday, investors' attention will be focused on the US GDP for Q3r (15:30 GMT+3). According to the forecast the index will rise by 2.5% against the rise of 1.4% in Q2. The release of this data is unlikely to significantly affect investors' expectations of the rate hike in December.
The meeting of the Fed will take place next week, but traders do not expect that any plans on monetary policy tightening will be adopted before presidential elections in the United States.
US economy is steadily showing signs of recovery, which increases possibility of the interest rate hike in the country before the end of this year. According to CME Group, probability of the monetary policy tightening in December is estimated at 78.5% against 60% in the beginning of the month.
It is likely that investors will continue to support the USD until the end of the year. If it happens, it will be a negative factor for the US stock market.