UK DATA: GDP Downside Risk Crystalised; Little Impact Likely for MPC
- The downside risks to GDP that we highlighted were crystalised this morning with Q/Q GDP coming in at 0.1%Q/Q (lower than the 0.2% consensus and BOE forecast). It was a softer 0.1% too, with the unrounded at 0.05%Q/Q (corrected from 0.06% as first published).
- Monthly GDP was in line with expectations, but there was a downside revision to November.
- Services was revised 0.2ppt lower in November (and the 0.2ppt upside surprise in December was not enough to quite offset this on the quarter).
- Industrial production was also soft in December.
- We don't think this will have much impact on the MPC. Voters are much more concerned about forward-looking growth prospects rather than backward looking data like this. On the margin it probably helps a little as it removes the possibility of a high print causing a headache, but next week's CPI and labour market data, as well as growth indicators such as the PMIs are much more important.
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BTP TECHS: (H6) Bull Cycle Extends
- RES 4: 121.58 1.764 proj of the Dec 10 - 17 - 22 price swing
- RES 3: 121.37 High Nov 13
- RES 2: 121.24 High Nov 26
- RES 1: 121.06 High Dec 1
- PRICE: 120.98 @ Close Jan 12
- SUP 1: 120.23/119.45 20-day EMA / Low Dec 22
- SUP 2: 119.13 Low Dec 10 and the bear trigger
- SUP 3: 118.00 Round number support
- SUP 4: 118.84 2.000 proj of the Nov 13 - 20 - 26 price swing
A strong rally last week in BTP futures cancelled a recent bearish threat, for now, and Monday's gains reinforce the short-term bull theme. The break of resistance at 120.59, the Dec 29 high, and key short-term resistance, signals scope for a continuation of the bull leg and opens 121.06 next, the Dec 1 high. Initial support to watch lies at 120.30, the 20-day EMA. A clear break of this average would highlight a possible bearish development.
US TSY FUTURES: FV/WN Flattener Blocked
Latest block trade lodged at 06:54:52 London/01:54:52 NY:
- FVH6 4.6K lots blocked at 108-31, looks like a seller.
- WNH6 1.1K lots blocked at 117-25, looks like a buyer.
- Prevailing bids and offers point to an FV/WN flattener, DV01 ~$200K.
USDJPY TECHS: Fresh Cycle High
- RES 4: 160.21 2.236 proj of the Dec 5 - 9 - 16 price swing
- RES 3: 160.00 3.000 projection of the Sep 17 - 26 - Oct 1 price swing
- RES 2: 159.60 2.000 proj of the Dec 5 - 9 - 16 price swing
- RES 1: 158.97 Intraday high
- PRICE: 158.75 @ 07:03 GMT Jan 13
- SUP 1: 156.66/155.46 20- and 50-day EMA values
- SUP 2: 154.35 Low Dec 5 and a reversal trigger
- SUP 3: 153.62 Low Nov 14
- SUP 4: 152.82 Low Nov 7
USDJPY is rallying once again, today. The latest climb has resulted in a breach of resistance at 157.89, the Nov 20 high and bull trigger. This maintains the bullish price sequence of higher highs and higher lows. Note too that moving average studies are in a bull-mode position, highlighting a dominant medium-term uptrend. Sights are on the 160.00 handle next, a Fibonacci projection. Key support to watch lies at 155.46, the 50-day EMA.
