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Daily brief: Bitcoin prices poised for more gains as risk assets gain after weak US GDP

Traders went risk on overnight on a weak US GDP print that trimmed Fed bets; Australia eyes second-quarter producer price index data as AUD/USD stalls and BTC/USD’s technical posture improves after breaking above resistance.

Friday’s Asia-Pacific outlook

A weak US second-quarter GDP print saw traders trim Fed rate hike bets as the threat of a recession weighs on the Fed’s calculus. That sent US stocks higher overnight on Wall Street, where the benchmark S&P 500 rose 1.21%. The two consecutive quarters of GDP decline put the US economy in a likely recession, although it is encouraging that the rate of contraction eased in Q2.

The US dollar fell as traders moved into Treasuries, especially on the short-end of the curve. That pushed yields lower, dragging on the US dollar. The DXY index fell to its lowest level since July 05. The Japanese yen was a big gainer against the USD. USD/JPY fell to its lowest level since June 17, dropping almost 2% during New York trading.

The Japanese yen may see more movement today on the release of several Japanese data prints. Japan’s June unemployment rate is slated to cross the wires, followed by July CPI figures for Tokyo. Later today, the Bank of Japan’s summary of opinions, June industrial production data, and June retail sales are due out. The data dump may help traders gauge where the BoJ’s head is.

WTI crude oil prices fell, while Brent crude prices rose. The weak GDP print likely explains some of the softness in the US prices. The WTI prompt spread and the 1:1 RBOB/CL crack spread, both gauges of demand for oil and gasoline have traded lower over the past week. That signals the potential for more weakness in the near term. However, WTI’s discount to Brent crude prices is likely encouraging demand through exports on WTI, which could keep prices elevated.

Consumer confidence in New Zealand 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 may rebound today if Australia’s second-quarter producer price index shows that factory-gate prices increased from Q1.

BTC/USD technical outlook

BTC/USD continued its run higher after crossing above a key level of resistance 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 level of prior support from May is the next target for the cryptocurrency. The RSI and MACD oscillators are both tracking higher above their respective midpoints.

BTC/USD daily chart

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This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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