Fundamental Weekly Forecasts for US Dollar, USDJPY, GBPUSD, AUDUSD and GOLD - 1Q Advanced Gross Domestic Product (GDP) & the FOMC policy decision
US Dollar - "Ultimately, the Dollar’s immediate risk is that it has gorged on speculative appetite in the persistent trend alongside the tangible yield advantage. That places the currency in a position to bleed off some of its excess as the uncommitted trend-runners bail. If the cumulative US economic docket comes out better than expected, the potential impact will be materially diminished to a disappointment – an asymmetrical influence. And, while it is important to watch the key US updates as it commands global attention; Dollar traders should also keep tabs on Euro-area/Greek tensions, general risk trends and the myriad of monetary policy-sensitive events for the other majors".
USDJPY - "A rate hike seems overwhelmingly unlikely just yet, putting the onus on the statement accompanying the announcement. The central bank seemed to switch to a month-to-month guidance regime at the March sit-down. If this continues, Chair Yellen and her colleagues on the rate-setting FOMC committee are unlikely to say much beyond hinting that tightening probably won’t arrive in May".
GBPUSD - "We remain cautiously bullish the British Pound as recent Bank of England rhetoric suggests that domestic interest rates may rise sooner than expected. Yield-seeking investors continue to favor currencies with higher rates of return, and interest rate differentials remain one of the most important drivers of exchange rate volatility. The key question is whether upcoming data and/or political uncertainty can derail what seems to be the start of a larger reversal for the UK currency".
AUDUSD - "In turn, the rebound from earlier this month may spur a test of the March high (0.7987) on the back of dismal developments coming out of the U.S. economy, but the policy divergence should continue to foster a long-term bearish outlook for AUD/USD as the Fed remains on course to raise its benchmark interest rate. Moreover, the aussie remains at risk of facing additional headwinds over the near-term as the RBA retains the verbal intervention on the local currency".
GOLD - "From a technical standpoint, gold broke below slope support on Friday, opening up a decline targeting the 61.8% retracement of the advance off the yearly lows at 1173 (key support). Note that a median-line extending off the monthly high converges on this level into the start of next week and we’ll reserve this region as our bullish invalidation level with a break below risking a decline back into critical weekly support at 1150/51. Interim resistance is eyed at 1191 with a breach above 1200 needed to shift our attention back to the long-side of the trade".
