FX Trader, Loonieviews.net
Summary: US markets were boosted by Apple and Boeing, but the Fed, Microsoft and Facebook still loom.
Wall Street rallied at the open thanks to Apple (AAPL: Nasdaq) and Boeing (BA: NYSE) results. Apple reported earnings after the market closed yesterday, and the results showed that there is more to Apple than an iPhone. CEO Tim Cook said the quarter’s results “demonstrated the underlying strength of [Apple's] business units” which helped lift earnings-per-share to a record $4.18.
Markets liked the news, and Apple shares jumped 4.43% in early trading.
Walls Street got an added lift when Boeing (BA: NYSE) results were better than forecasts. BA reported Q4 earnings of $5.48/share and earned a record $101.1 billion in revenue. Traders are hoping for similar positive outcomes from Microsoft (MSFT: Nasdaq), and Facebook (FB: Nasdaq) after the close of business today.
Financial markets are looking to Federal Reserve chair Jerome Powell to do his part to keep the party going. The Fed is widely expected to deliver a somewhat dovish policy statement today, emphasising “caution” and “flexibility.” The concern is whether Powell sticks to the script during his press conference and avoids a repeat of the market carnage following the December 21 meeting.
The US dollar has climbed against all the G10 majors since the New York open. This morning’s better than expected ADP employment change data (Actual 213,000 versus a forecasted 178,000) suggests there could be some upside risk to Friday’s nonfarm payrolls, where forecasts call for a gain of 166,000 jobs.
The US dollar strength may be partly driven by trimming of positions ahead of this afternoon's FOMC statement. USDCAD is the only losing currency pair, falling from 1.3235 to 1.3207, undermined by the jump in WTI oil prices to $54.00/barrel.
For those interested in US economic data:
AI: The good, the bad, and the bubble
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Steen Jakobsen,
Chief Investment Officer
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
Peter Garnry,
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As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Ole S. Hansen,
Head of Commodity Strategy
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist
