USD GDP On Watch

Today’s revised US Q2 GDP figures will be closely watched ahead of Fed chairman Powell’s Jackson Hole speech tomorrow. The initial figures pegged a dire -0.9% reading for the quarter and current forecasts suggest only a mild improvement to -0.7%. While this reading would confirm a technical recession in the US, following a negative reading in Q1, it would likely be enough to keep the market’s Fed expectations on track.

Pricing for a larger .75% hike in September has fallen back to around 50% from highs earlier this week of 60%, sunk by a dismal set of PMIs earlier in the week. Any upside surprise would of course be welcomed by USD bulls, likely to reverse the current USD selling and equities buying we are seeing. Similarly, a downside surprise will likely further entrench USD selling into tomorrow’s event, keeping equities supported for now.

Technical View

NASDAQ

The NASDAQ is at a very key level here. Following the breakout above the bear channel from YTD highs, the market has since retraced and is now retesting the broken channel top along with structural support at the 12875.84 level. If today’s data sees USD sell off, bulls can look for this area to act as a platform for the next leg higher in the NASDA through 13863.02. Alternatively, a USD rally today would see the index fall below the level towards 12220.22 as next support.