USD Adv GDP Up Next
On the back of last night’s very interesting FOMC, traders are now turning their attention to the next round of US data due today. Markets will get their first look at US GDP over the second-quarter with consensus forecasts calling for an increase 0.4% from the prior quarter’s -1.6% reading. With the Fed having held off from actioning a larger 1% hike, sticking with the expected .75% hike, and acknowledging the slowdown in spending and production, USD sentiment has shifted a little. Some players are interpreting Powell’s comments last night as laying the groundwork for a slower pace of tightening over the remainder of the year.
With this in mind, today’s adv GDP reading has the potential to fuel further USD downside. If GDP is seen only rising 0.4% or worse over the last quarter, this will no doubt fuel recessionary fears. There are even small risks that we might see a negative reading, confirming a technical recession. In either case, USD is likely to come off as traders anticipate less aggressive action from the Fed in the near-term, allowing equities room to rally.
On the other hand, if data comes in above forecasts today that might well alleviate near-term recession fears. With Powell having downplayed recession fears yesterday, such an outcome today would likely feed into a higher USD, weighing on equities.
Where to Trade US Adv GDP?
Nasdaq
The reversal off the 10999.03 lows has seen the market forming an inverse head & shoulders pattern. Price is now rallying towards the neckline of the pattern at the 12875.84 level and, with both MACD and RSI bullish here, a turn lower from USD will likely pave the way for a break higher. Bulls can look for a break of this level targeting a move through the bear channel top towards 13863.02 next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.