The dollar broke out last week, but is a near term correction about to be seen? The move on trade weighted Dollar Index above 97.70 was a key move to levels not seen since mid-2017, but in the wake of last Friday’s blowout Advance GDP, this could be a time for taking profits (at least for now). GDP smashed expectations, but the huge beat to consensus expectations was riddled with one-offs which will impact negatively on future growth numbers. A huge swathe of inventory stockpiling bloated the number, whilst an improvement in the trade deficit comes from a big drop in imports (alluding to weaker consumption). Furthermore, muted inflation in the PCE Prices suggests that the Fed I right to have put a pin in the hiking cycle. There are hints now of a dollar correction, with rebounds coming in EUR/USD and Cable. Gold is also ticking higher. One major pair that could be somewhat unpredictable in the coming days is Dollar/Yen. The yen strengthened into the weekend as traders looked to close short positions ahead of a ten day national holiday in Japan. With reduced liquidity the pair could be spikey, especially in a week of heavy data and central bank decisions.
Wall Street closed back higher again on Friday with the S&P 500 +0.5% at 2940. With US futures ticking higher by +0.1% Asian markets are mildly positive (Shanghai Composite +0.5%). European markets are edging mildly higher in early moves with the FTSE futures +0.2% and DAX futures +0.1%. In forex,