The
Office for National Statistics confirmed that gross domestic product reached
0.4% in the final quarter of 2017, slowing from growth of 0.5% in Q3. Although
the ONS revised estimates for full year growth in 2017 to 1.8% from 1.7%, this
still remains the lowest growth rate since 2012. Sterling is likely to remain
depressed as investors digest the GDP figures, with a strengthening Dollar
fueling further downside on the GBPUSD.
Taking
a look at the technical picture, GBPUSD remains under pressure on the daily
charts. Sustained weakness below the 1.4100 could invite a decline towards
1.4000.
Markets mixed
ahead of Easter break
Global
equity markets may struggle for direction today as investors stroll to the
sidelines ahead of the long Easter weekend.
Asian
stock markets were mostly mixed in thin trade, as a tech-fuelled selloff on
Wall Street overnight weighed on investor sentiment. Although European stocks
opened slightly higher, gains could be limited as the holiday mood kicks in.
With Wall Street still at the mercy of a painful selloff in the technology
sector, further losses could be on the cards this afternoon. Although fears of
a full blown global trade war have receded, this has been replaced with growing
concerns over a regulatory crackdown on technology firms. The uncertainty and
market anxiety could expose stock markets to downside risks.
Dollar
holds gains post US Q4 GDP
The
Dollar held tightly onto its gains against a basket of currencies on Thursday,
after fourth quarter US GDP figures were revised up to 2.9% from 2.5% in the
previous session.
This
upwards revision to the fourth quarter growth boosted sentiment towards the US
economy and stimulated expectations over the Federal Reserve adopting a
slightly more aggressive approach on rate hikes this year. Speculation around
higher rates have injected Dollar bulls with a renewed sense of confidence,
elevating the Dollar against its major counterparts.
Taking
a look at the technical picture, the Dollar Index is slowly building momentum
on the daily charts. The candlesticks are in the process of crossing above the
20 Simple Moving Average, while the MACD is showing early signs of trading to
the upside. Prices have breached above the 90.00 resistance level which could
encourage an incline higher towards 90.45. Alternatively, a failure for prices
to keep above 90.00 may result in a decline lower towards 89.50.
Rand slips on
SARB rate cut
South
Africa’s Rand extended its losses against the Dollar during early trading on
Thursday, following yesterday’s interest rate cut by the South African Reserve
Bank (SARB).
There
has been a recovery in the Dollar strength against many of its different
counterparts over the past 24 hours, so it is possible that the Dollar’s
recovery could be a culprit behind some of the current Rand weakness. Comments
from SARB Governor Lesetja Kganyago that the Rand is now ‘somewhat’ overvalued,
is likely to provide a scenario where it may be difficult for the Rand to
advance any further than the 4.87% it has already made year-to-date.
Focusing
purely on the technical picture, an appreciating Dollar could push the USDZAR
towards 11.830 in the near term.
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