US Dollar Fixed on Mixed GDP, Crude Oil Prices at Uptrend Support

Asia Pacific Market Open Talking Points

• US dollars fall as GDP data fuels Fed rate cut games, S & P 500 and NZD gain
• Crude oil fall to support aid like Trump press OPEC at lower prices
• Markets looks at an illiquid start, Japanese stocks offline for Golden Week

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FX News Friday

US Dollar went down on Friday but still managed to cover a solid week that had a few risk of risk aversion . Most of its weakness occurred after a mixed first quarter US GDP report. While growth surged upwards (3.2% against 2.3% expected), it was undermined by weakness in private consumption (1[ads1].2% against 2.5% earlier). The latter accounts for about 70% of total GDP.

An increase in inventory, typically a volatile component, contributed to a decent pile of growth . That said, US government bond yields reduced which signaled several Fed rate cut games. Fed funds futures are now pricing at about 66% of a cut at the end of this year, up from 61% on Thursday. At the end of the day, S & P 500 rose 0.47% when pro-risk Australian and New Zealand Dollars climbed.

But it was not without even sailing. Following the GDP report, US President Donald Trump took another jab on to get OPEC to increase oil production . This sent the item lower on its worst day for over four months and ended the most disappointing week for two months. As a result, the energy departments weakened and deprived the S & P 500 of its full potential for the day.

Crude Oil Technical Analysis

By looking at the daily chart, crude oil was closed right on the rising support line from late December. The last drop occurred along with the [negative] RSI divergence which was hinting at a peak to come. Confirming a close under the trend line opens the door to a new dominant downtrend. On the other hand, the resumption of uprising involves clearance resistance above 66.58.

Daily Map of Crude Oil

Chart Created in TradingView

Monday's Asia Pacific Trade Session

When we start a loaded week of critical US economic event risk, Monday's Asia Pacific season lacks data. As such, this focuses on risk trends. Japanese markets are offline for Golden Week holidays that bring with it the lower than usual level of liquidity, which can increase the volatility of surprising announcements.

FX Trading Resources

— Posted by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com

To contact Daniel, use the comment section below or @ddubrovskyFX on Twitter