British Pound Outperformance at Risk on GDP Growth Results

Fundamental Forecast for British Pound: Bullish

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Levels that keep the US dollar rally underway are well defined.

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Australian and New Zealand dollar sentiment has turned from a bullish extreme, according to COT data.

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Australian / New Zealand dollar Sentiment sees Major Shift

It is has been a bearish open to the year for crude. The commodity suffered its worst monthly decline since December of 2008 with a 12 percent tumble from the more than one-year high set earlier in the month.

Credit:
Oil Closes its Worst Monthly Decline Since December 2008 as Risk Appetite Retreats, the Dollar Rallies

A series of three rate decisions from the Reserve Bank of Australian, European Central Bank, and Bank of England may dominate the headline in the coming week, but US dollar strength could continue to be the other major story, especially since US non-farm payrolls (NFPs) are projected to rise for only the second time since December 2007.

Credit:
US Dollar: US NFPs and Three Rate Decisions May Favor Additional Strength

Considering the significant reversal in underlying risk trends over the past few weeks, GBPCHF marks a striking case. Historically, the pound has held the roll of a high-yielding carry currency and the franc has played its part as a straight forward funding and risk-aversion currency. Yet, with the most recent reversal in investor sentiment, we have seen these rolls diminish (if not reverse).

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GBPCHF Range Developed Around Unusual Fundamentals

The Canadian economy grew 0.4% in November following a 0.2% rise the month prior led by a 2.4% improvement in wholesale trade. A stronger than expected Canadian labor market-forecasted to have added 15,000 jobs in December- is helping to fuel consumer demand.

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Canadian Dollar Pressured As Crude Falls For Fourth Day

The New Zealand dollar continues to trade sideways as robust U.S.GDP figures have temporarily eased concerns over the pace of the recovery. The “kiwi” isn’t seeing typical support that follows increased optimism as commodity prices aren’t seeing the follow though that equity markets are experiencing as global growth concerns remain. China’s efforts to curb lending continue to weigh on prices of raw materials and related currencies.

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Light Crude 01/29

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Gold 01/29

U.S. GDP rose 5.7% in the fourth quarter which was the fastest pace of growth in six years, surpassing estimates of 4.7%. The second consecutive quarter of growth signals that the economy has distanced itself from the worst recession since WWII. A 39.3% increase in gross private investment was the primary driver of growth, as companies increased their spending on equipment and software.

Excerpted from:
U.S. 4Q GDP Rises 5.7% As Private Investment Soars

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Euro-Zone Consumer Price Inflation Rises Less-Than-Expected

The US Dollar and Japanese Yen rose against the spectrum of major currencies while stocks tumbled as risk aversion continued to dominate currency markets. Traders are likely to overlook European event risk, looking ahead to fourth quarter US GDP results.

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Currency Markets Locked in Risk-Driven Trade, Looking Ahead to US GDP