It was interesting to see the UK GDP report today, especially after the great retail sales yesterday. It was a bad GDP report but no real surprise there. The US durable goods orders are due to be published today and they will have a bigger impact on the USD. The US consumer sentiment is due at 3 pm GMT, but before that we have BOE Carney and FED Chairman Powell speaking, so it is going to be a lively session to trade.

The European Session

• Terrible UK GDP Report – The UK GDP report came out as expected at 0.1% month/month, while the yearly GDP figure came at 1.2%. This is a bad number considering that the monthly GDP was at around 0.4% back in February. Although, not as bad as the details inside the report. Exports fell by 0.5% while imports decreased by 0.6%. Now, that’s really bad and the GBP is feeling the weight.
• Oil Falls on OPEC – Oil has been losing ground fast today in the back of comments from OPEC and non-OPEC oil producers. It just broke below $69, coming down from $70.70 this morning, so that is a $2 decline almost. Comments have been flowing from OPEC countries today, suggesting that they will increase Oil output and that is likely to be decided in June when they meet in Vienna. Saudis said that they will readjust the output policy in June.
• USD/CAD Breaks Resistance – USD/CAD has been finding it very difficult to break above the major resistance level at 1.2920. The break finally came today though as Oil prices tumble lower with the CAD following it into the abyss.
• Spanish Stocks Dive on Political Trouble – Spanish opposition is calling for a vote of non-confidence against PM Rajoy and the main party is backing that up. This is another political trouble in Europe and Spanish stock index IBEX has lost more than 2% so far.

The US Session

• US Durable Goods Orders – The US durable goods orders report is about to be released soon. Goods orders are expected to decline by 1.3%. We are coming from two very strong readings in the last two months. Goods orders grew by 3.1% in March and 2.6% in April, so a decline this time is tolerable. The surprise will be on the upside though. If the number comes up positive, then I expect another round of USD buying.
• BOE’S Mark Carney Speaks – The BOE Governor Mark Carney is to speak in Stockholm later today. It will be interesting to hear what he has to say about the horrible UK GDP report today, if he decides to touch the subject. He’s been trying to keep his head up despite deteriorating economic data. So, if he decides to acknowledge the weakening economy, the GBP will likely take another hit.
• FED’s Jerome Powell Speaks – The big guys are meeting in Stockholm today for a conference called “The future of central banking”. We don’t know whether Powell will comment on FED’s monetary policy path or if he will just stick to the main topic. But we will follow it closely.
• US UoM Consumer Sentiment and Inflation Expectations – The University of Michigan will release its consumer sentiment inflation expectations reports. I don’t expect the consumer sentiment figures to move the market much, unless they deviate a lot from expectation. The inflation expectations are more important at this moment in time since inflation and wages are what the FED is most interested at right now. Last month, expectations came at 2.8%.

Trades in Sight

Bearish GBP/USD

• The trend is still bearish
• The bounces look anemic
• Bad fundamentals from the UK

The 100 SMA is a great place to sell

GBP/USD is looking increasingly bearish. It tried to put up a reverse this morning, but the sellers returned, sending it lower. We missed the chance to sell but will do so if we see another attempt to retrace higher. The GDP report killed any hopes that the bulls had for this pair, so the situation looks gloomy.

In Conclusion

The US durable goods orders report was just released now. At -1.3% the headline number was bad, but the core orders which strip out transportation, air and defense orders, grew by 0.9% against 0.5% expected. That’s a good reading and it has saved the USD form the negative headline number.