Market Drivers January 26, 2018
Dollar tries to stabilize
UK GDP beats
Nikkei -0.16% Dax -0.03%
Europe and Asia:
GBP UK GDP 1.7% vs. 1.4%
USD GDP 3.0% vs. 3.2%
CAD CPI -0.6% vs. -0.1%
After another week of drubbing, the dollar tried to stabilize on the last trading day of the week in volatile Asian and early London trade.
The greenback seesawed, first rising towards the 110.00 figure in Asia open session, only to give back most of the gains and trade near 109.00 by the US open. The EURUSD tried to pop 1.2500 again but found sellers ahead of the number and retreated to 1.2450 by midday London session.
In UK cable was propped up a bit by better than expected UK GDP data which printed at 1.5% vs. 1.4% eyed, but overall UK GDP grew at 1.8% in 2017 which is the slowest rate of growth in 5 years.
Looking ahead to US session the market will get the preliminary US GDP reading for Q4 and Canadian CPI. US GDP is expected to print at 3.0% versus 3.2% the period prior, but even a slight upside surprise could provide an excuse for short covering squeeze, as the greenback is grossly oversold and positioning is now highly skewed against the dollar.
Growth is the one variable that can save dollar bulls, as evidence of better than 3% rate of expansion is sure to make the Fed maintain its tightening course which is turn could bring flows back into the buck. For now, the 110.00 level in USDJPY remains key. If the market can close above that by end of the day, the buck will have likely put in a near-term bottom.