Dollar weakens to position squaring and oil pressure

The dollar fell across the board on Friday, despite encouraging Q4 GDP numbers, which came out higher than market’s expectations.

The Q4 GDP figure at 3.8 percent was above the market consensus of 3.7 percent but was still not good enough for the USD to hold on to its gains as traders were looking for a number closer to 4 percent. Further the single-family home sales numbers also disappointed the market and thus lead to a further sell off in the world’s reserve currency.
As if all this was not enough surging oil prices and comments from the Saudi oil minister acknowledging persistently high oil prices in the future also weighed on the greenback.
Yen, despite signs of continuing deflation in the economy and weaker than expected growth, gained further ground against the dollar as the dollar sell off vis a vis the single currency spilled over.
The GDP numbers from the US show that the economy is on the road to improvement and would thus lead to further rate hikes by the Fed. The market is torn between dollar positive data, increasing attractiveness of the dollar denominated assets and dollar negatives like the twin deficit.
This week’s crucial data includes the payrolls numbers and the manufacturing data.