Global macro overview for 01/02/2016:
The US fourth quarter gross domestic product increased by 0.7% according to the Commerce Department data released last Friday. This is a sharp slowdown as the third quarter GDP growth rate hit the level of 2%. The main reason behind the drop was lower oil prices which continued to decrease and bad weather (heavy blizzard) over the last months that dented consumer spending on utilities and apparel. Nevertheless, there is no reason to raise concerns about momentum in 2016, because the overall US economic growth was 2.4% in 2015, after a similar growth pace posted in 2014. In conclusion, this GDP figure for the fourth quarter is only a preliminary gauge which will be revised in next two months.
Now let's take a look at the technical picture of the US dollar index on the daily chart. The violation of the lower channel boundary was quickly recovered as the market rallied higher towards the important technical resistance at the level of 99.98. Nevertheless, the current pattern starts to look like a rising wedge, which means the downside breakout still can not be ruled out as long as the 99.98 resistance holds.