Risk aversion dominates ahead of UK GDP data

Risk aversion dominates ahead of UK GDP data

FTSE => The index falls away from 7300
BTC/USD => The cryptocurrency falls below 30k
USD/JPY => The pair falls below 130.00


FTSE falls ahead of GDP data

The FTSE closed up by triple digits yesterday, booking gains of 1.4%, helped by early gains on Wall Street following US inflation data.

Today the focus is on UK GDP data which is expected to show solid growth across Q1, but that would be mainly owing to solid growth at the start of the year. The monthly GDP for March is expected to slow right down to 0.1%, and the outlook is worse as the cost of living crisis squeezes household incomes.

The data comes after the BoE warned about a recession in the May meeting and forecasted a contraction in 2023.

UK GDP Q1 QoQ Expected: 1% (0.4%) Previous: 1.3%

Risk aversion dominates ahead of UK GDP data

Where next for the FTSE?

After facing rejection at 7620, the FTSE rebounded lower, falling through the 50 & 100 sma before running into support at 7150.

The price has attempted to bounce from here but struggled to rise beyond 7350, which the long upper wick suggests that there was little acceptance at the upper level. The 50 SMA crossed below the 100 SMA; the RSI supports further downside.

Sellers will look for a move below 7150 to continue the bearish trend towards 7100. Buyers will be looking for a move over 7300 and 7350 to expose the 50 & 100 SMA,

Bitcoin crashes below 30k

Bitcoin crashed on Wednesday, and the selloff continues today as panic sweeps across the market and breaks below a key support; the cryptocurrency has lost more than 50% of its value over the past six months as part of a broader downturn within the crypto space which has wiped over $1.5 trillion from the cryptocurrency market.

BTC/USD has traced equities, particularly tech stocks, lower amid expectations of a higher interest rate environment as the Fed sets about taming 40-year high inflation. Further declines in the controversial TerraUSD, an algorithmic stable coin, as it continues to de-peg from the dollar, have also helped Bitcoin fall below the key $30k level.

USD/JPY falls as hawkish Fed bets ease

USD/JPY fell 0.35% yesterday following US CPI inflation data release.

The USD weakened versus the yen after US inflation slowed in April, albeit by less than forecast. The data suggests that peak inflation could have passed, but CPI is not about to drop lower suddenly. With subcategories across the board reflecting rising prices, inflation seems broad-based within the economy.
However, the data tempered hawkish Fed bets, pulling treasury yields and the USD lower versus the yen as the central bank divergence gap closed slightly.

Today attention remains on the economic calendar with the release of US jobless claims and wholesale inflation.

U.S. CPI April YoY

US PPI April YoY

Actual: 8.3% (0.2%)

Expected: 8.9% (0.3%)

Previous: 8.5%

Previous: 9.2%

Support can be found at 129.40 (weekly low) and 128.60 (May low).

Resistance for the pair can be seen at 131.50 (2022 high) and 132.00 (round number)

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