Bitcoin prices set for more gains as risk assets rise after weak US GDP

Bitcoin, BTC/USD, US GDP, Crude Oil, Technical Outlook – TALKING POINTS

  • Traders took overnight risk on a weak US GDP print that cut Fed bets
  • Australia eyes second quarter producer price index data as AUD/USD stagnates
  • BTC/USD Technical Posture Improves After Breaking Above Resistance

Friday’s Asia-Pacific Outlook

A weak print of US GDP in the second quarter saw traders cut bets on the Fed’s rate hike as the threat of a recession weighs on the Fed’s calculus. That sent U.S. stocks up overnight on Wall Street, where the benchmark S&P 500 index rose 1.21%. The two consecutive quarters of GDP decline have pushed the US economy into a likely recession, although it is encouraging that the rate of contraction eased in the second quarter.

The US dollar fell as traders turned to Treasuries, especially on the short end of the curve. This pushed yields lower, dragging the US dollar down. The DXY index fell to its lowest level since July 05. The Japanese yen was a big winner against the USD. USD/JPY fell to its lowest level since June 17, falling almost 2% during trading in New York.

The Japanese Yen may see more movement today with the release of several Japanese data printouts. Japan’s June unemployment rate is expected to cross the wires, followed by July’s CPI numbers for Tokyo. Later in the day, the BoJ’s Opinion Summary, June Industrial Production data and June Retail Sales are due out. The data dump can help traders gauge where the BoJ’s head is.

WTI crude oil prices fell, while Brent prices rose. Weak GDP likely explains some of the weakness in US prices. The WTI Rapid Gap and the 1:1 RBOB/CL Crack Gap, both gauges of oil and gasoline demand, have been trading lower over the past week. This signals the potential for further near-term weakness. However, WTI’s discount to Brent prices is likely to encourage demand through WTI exports, which could keep prices high.

New Zealand consumer confidence rose in July, according to ANZ. The Kiwi dollar gained nearly 0.5% against the USD overnight. The Australian dollar was little changed despite higher iron ore prices in China. AUD/USD could rebound today if the Australian Producer Price Index for the second quarter shows ex-factory prices rising from the first quarter.

BTC/USD Technical Outlook

BTC/USD continued its upward run after breaking above a key resistance level in place since early June following a break above the 50-day simple moving average and a descending trendline from March. The 100-day SMA and a prior support level from May is the next target for the cryptocurrency. The RSI and MACD oscillators both track higher above their respective midpoints.

BTC/USD daily chart

Chart created with TradingView

— Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwater on Twitter

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