Market Insights: USD Strength Ahead of GDP

The USD after a relative stabilization yesterday, during today’s Asian session has gained considerable traction against its counterparts, as the market focuses on the release of the revised US GDP rate for Q4. The preliminary release showed that the US economy grew at a rate of 3.3% qoq on an annualized basis. The preliminary release showed a slowdown in the pace of growth of the US economy if compared to Q3, yet the narrative of the Fed for a possible soft landing of the US economy seems to still hold water. Should the rate accelerate we may see it providing some support for the USD as it would brighten the outlook of the US economy and allow the Fed to maintain rates high for longer. On the flip side should the estimate show further slowdown worries for a possible recession in the US economy may resurface weighing on the greenback and at the same time providing inflows for gold.

USD/JPY remained in a sideways motion just above the 150.00 (S1) support line. Despite the RSI indicator jumping slightly above the reading of 50, we tend to expect the sideways motion to be maintained for the time being. Should a selling interest be expressed by the market, we may see USD/JPY breaking the 150.00 (S1) support line and take aim for the 148.55 (S2) support base. Should the bulls rake over, we may see the pair rising aiming if not breaching the 151.85 (R1) resistance line, which marks a 33 year high for the pair and if R1 is broken we set the next possible target for the bulls at the 154.00 (R2) resistance barrier.

The Kiwi weakened during today’s Asian session, as RBNZ remained on hold keeping the Official Cash Rate (OCR) unchanged as was expected, yet at the same time eased on its hawkishness as expressed in November’s interest rate decision. In the accompanying statement, the bank mentioned in its forward guidance that the OCR is already at restrictive levels and that it should remain so for a sustainable period of time to ensure that inflation returns to the bank’s 1-3% target, yet at the same time removed the part for a possible rate hike in the future if needed. We note how the release weighed on the Kiwi and expect it to continue pressuring NZD on a monetary level.

NZD/USD dropped today during today’s Asian session, breaking the 0.6120 (R1) support line, now turned to resistance. We tend to maintain our bearish outlook, yet note that the RSI indicator has breached below the reading of 30, highlighting the strong bearish sentiment, yet at the same time implying that the pair is in oversold levels and is ripe for a correction higher. Similar signals are being send also be the fact that the price action has broken below the lower Bollinger band. Should the bears maintain control over the pair’s direction we may see NZD/USD aiming if not breaking the 0.6050 (S1) support line, while even lower we note the 0.5995 (S2) support barrier. For a bullish outlook we would require the pair’s price action to reverse direction, break the 0.6120 (R1) resistance line, break the downward trendline which guided the pair in the past three days and aim if not break the 0.6190 (R2) resistance level.

今日其他亮点:

Today in the European session we note the release of Eurozone’s February business climate, economic sentiment and industrial sentiment indicators. In the American session, we highlight from the US the release of the revised GDP rate for Q4, Canada’s current account balance for Q4, while oil traders may be more interested in the release of the weekly EIA crude oil inventories figure. On the monetary front, we note that ECB’s McCaul, BoE’s policymaker Mann, Atlanta Fed President Bostic, Boston Fed President Collins and NY Fed President Williams speak. During the Asian session, we get Japan’s preliminary industrial output for January and retail sales for the same month, while from Australia we get the CapEx growth rate for Q4.