Growth in Doubt After US GDP

Last week's +0.3% GDP figure in the UK was enough to make the pound the top performer last week in a sure sign of stagnant global growth. Then Friday's US growth figure missed by a half-point and dashed the near-term hopes of the USD/JPY bulls. This week opens a day later than usual in Japan as Golden Week holidays begin. The Premium Insights issued 2 new trades in GBPUSD on Friday and 4 comparative monthly GBPUSD charts highlighting our principal bias on the pair. Today's charts (issued below) are related to the latest Trading Note issued on GBPUSD. All charts and trades are in the latest Premium Insights.

The first quarter GDP report from the US was a disappointment with annualized growth at 2.5% compared to the 3.0% consensus. Consumer spending was unexpectedly strong but it wasn't enough to overshadow the drag from trade and inventory drawdowns.

USD/JPY fell immediately and continued to drop until stalling just ahead of the 21-day moving average at 97.55.

The week ahead could be unpredictable for yen crosses with Japanese desks understaffed. A portion of Friday's decline in USD/JPY was probably on position squaring ahead of the holidays. There is a line of thinking that Japanese firms will begin to re-allocate asset weightings offshore following the holidays. At some point this week, we could see traders buying USD/JPY to frontrun that move.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR -34K vs -30K prior

JPY -80K vs -93K prior

GBP -60K vs -62K prior

AUD +31K vs +53K prior

CAD -72K vs -76K prior

NZD +28K vs +31K prior

CHF +1K vs -3K prior

US Dollar Index longs at 38K vs 50K prior

For the second week in a row, AUD traders backed out of long positions. Signs of a slowdown in China and the potential for an RBA rate cut are concerns but even with the large shift in positions, the Australian dollar hasn't weekend much since April 14.