All the talk this week has been around the state of growth in the world and in particular the US economy.
We’ve had central banks turning dovish and a number of key economic data points failing to impress investors recently so today the number to watch is clearly US GDP.
This is the second revision of annualized Q4 GDP and while there is room for a change, most are expecting to see 2.4% YoY.
Probably a more interesting story is to look at the recent run of GDP numbers. In Q2 the number was much more impressive at 4.2%. It subsequently fell to 3.6% in Q3 and has now weakened to 2.6% and possibly 2.4% if it is revised lower.
Before you ask, the predictions for the Q1 period appear to be far worse, with some coming in around the 1.3% mark. So that really does indicate why everyone is talking about slowing growth and why money is flowing into longer-dated bonds.
Clearly, there remains some downside risk in the US economy and investors are well aware of that fact.
Forex Signal Update
The FX Leaders Team finished with 4 winners from 5 trades in a strong performance from the guys.
DAX – Active Signal
The DAX has bounced nicely off the 11300 level and we found a pretty nice entry right off support. Price has been holding up well, given the US has sold off over the last two sessions. So that bodes well should it bounce tonight.
USD/JPY – Closed Signal
The USD/JPY has continued to find some downside in Asian trade this morning and our signal just hit our take profit. Stocks are weak in Asia and that has contributed to some JPY upside here. Given the momentum, this is one to keep an eye on going forward for more opportunities.
Bitcoin has once again ticked over the $4,000 level, as we continue to sit on our hands and wait for some clear direction in the overall cryptocurrency market.
Interestingly this period of range bound action has seen BTC notch up the lowest volatility on record. In good news for the bulls, periods of low volatility have always preceded a bull run, although we don’t have a large sample size to deal with.
What is for sure, is that periods of low volatility do move back to periods of high volatility, so perhaps a big move is still on the cards. Whether that is to the upside is debatable.