NY Open: Powell furore fades
FX Trader, Loonieviews.net
Summary: As the excitement generated by the Fed chair's monetary policy comments fades, FX is in a bit of a funk while traders await the the crunch meeting between the presidents of China and the US at the weekend. Oil, on the other had, has ripped higher.
Wall Street is consolidating yesterdays large gains. Prices are modestly in the red because traders appear to be unwilling to get too involved ahead of month end and this weekend’s President Trump and President Xi Jinping meeting in Argentina. Trump seems to believe that the prospect of an increase in tariffs on Chinese imports that take effect January 1 and the threat of a new round of tariffs will bend China to America’s will. Financial markets are sceptical which explains this morning’s cautious price action.
FX markets are in “wait and see” mode. The G-10 majors are trading close to where they opened, although the US economic reports have been mixed to weaker. Pending Home Sales fell 2.6% in October, the lowest since June 2014. (forecast 0.5%) and Jobless claims rose 234,000 last week (forecast 220,000) However, US Personal Income in October, at 0.5% was a tick higher than expected.
Oil prices soared. WTI rose as much as 3.0% from where it opened in New York on a report that Russia supported Saudi Arabia’s call for new production cuts to help shore up prices. Prices retreated to $51.10/barrel because the Opec meeting is still a week away and a lot of things could change.
Latest Market Insights
Outrageous Predictions 2023: The War Economy
- The constantly growing global need for energy drives the world's richest to huddle up and launch a R&D project in a size the world hasn't seen since the Manhattan Project gave the US the first atomic bomb.
French President Macron resignsThe political stalemate in France and the rise of Marie Le Pen following the 2022 elections corners President Macron, forcing him to give up on politics and resign from his position. At least for now.
Gold rockets to USD 3,000 as central banks fail on inflation mandateAs markets and central banks realise that the idea that inflation is transitory is wrong, and that prices will remain higher for longer, gold is sent through the roof, hitting a price tag of USD 3,000
EU Army forces EU down path to full unionWith continued challenges in the region and a US military that isn't aggressively enacting its former role as global policeman, the European Union agrees to create its own armed forces, bringing the whole region closer.
A country agrees to ban all meat production by 2030In an effort to become one of the global leaders on the path to net-zero emissions, one country decides to not only put a heavy tax on meat, but to ban domestic production entirely.
UK holds UnBrexit referendumFollowing a recession and domestic pressure, the United Kingdom is thrown into political turmoil that will end with a vote to wind back Brexit.
Widespread price controls are introduced to cap official inflationHistory tells us that with the war economy comes rationing and price controls. And this time is no different, as policymakers introduce strict price controls that lead to a range of unintended consequences.
OPEC+ & Chindia walk out of the IMF, agree to trade with new reserve assetSanctions against Russia have caused widespread turmoil due to US Dollar moves in countries across the globe that don't consider the US an ally. To relieve themselves from this, they leave the IMF and create a new reserve asset.
USDJPY fixed to the USD at 200 as Japan overhauls financial systemFollowing the challenges that faced the Japanese Yen in 2022, the Bank of Japan attempts to keep the currency from sliding. Unsuccessful on the long-term, Japan will launch a reset of its entire financial system.
Tax haven ban kills private equityWith the war economy comes an increased focus on national interests and sovereign nations' ability to assert themselves. In that regard, the OECD countries turn their attention on tax havens and pull the big guns out, banning them altogether.