Financial markets finished marginally lower on Friday. The Dow Jones Industrial Average and S&P 500 both closed down by 0.19% while the Nasdaq dropped -0.10%, taking all 3 US indices lower for the week.
The fall comes after comments from the Federal Reserve reinforced monthly asset cuts earlier on in the week.
In currencies, it was a powerful week for GBP/USD which gave up almost half of the previous week’s gains. Traders bought up GBP/USD previously, after BOE Governor Mark Carney became more hawkish on central bank policy.
However, traders reversed their trades last week after UK inflation came in lower than expected and GBP/USD was left in a significantly overbought condition.
Elsewhere, USD/CAD rebounded strongly after two weeks of declines, taking the currency back up towards 1.12 – although the market also traded down to 1.09. USD/CAD is relatively volatile here and could trade in a choppy range next week.
Momentum in USDJPY, meanwhile, has slowed. The currency has been hovering around the 102 level now for the last three weeks.
FXeeda Results
Our forex signals enjoyed some success this week as we recorded gains in half of the markets that we trade with some hefty gains recorded in USD/CAD, GBP/USD and GER30.
Our signals benefitted from the reversal in GBP/USD, picking up 236 pips, while we also took over 300 pips from USD/CAD. Our system also identified a number of winning trends in stocks as we took over 15,000 points from the German Dax index.
EUR/USD and gold were our weakest pairs this week.
Week Ahead
The week ahead will be dominated by GDP releases with Germany, the UK and US all set to release their quarterly economic output reports.
Germany are expected to announce a year on year GDP print of 1.4% while UK traders will be looking for 2.8% year on year. In the US, GDP is expected to have fallen to just 2.6%, from last quarter’s 3.2%.
As well as GDP prints, traders will be watching out for US consumer confidence on Monday, and US durable goods orders on Thursday, (expected to come in at -1.0%).
USDJPY Outlook
As already noted, momentum in USDJPY has slowed of late as the currency pair has found support around the 102 level. On Friday, the currency was strong and traded above its pivot throughout the day. However, the movement is not what we have come to expect from dollar yen and the range was just over 40 pips.
This drop in momentum is likely to be a precursor for a bigger move over the coming couple of days and it would be no surprise to see USDJPY push higher once more. Next week’s GDP figure out of the US could be the catalyst as there is every chance that the 2.6% expected figure will be bettered.
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EUR/USD Outlook
It is very much a similar story for EUR/USD. The currency has been losing momentum in recent weeks and strength in the US economy next week could see EUR/USD fall back sharply from here. Most traders in EUR/USD are positioned long so there is plenty of room for bears to join the mix and take the market down.
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