NY Open: That's a wrap
FX Trader, Loonieviews.net
Summary: A good start for the larger G-10 currencies turned to a reversal later this session when profit-taking boosted the greenback across the board.
The major G-10 currencies had a good week. The Australian and New Zealand dollars gained 1.56% and 1.49% respectively, compared to last Friday’s New York close. The Canadian dollar rose 1.4%, and the euro increased 1.2%. However, those gains were at the New York open. Since then profit taking has boosted the greenback across the board with EURUSD down 0.62% since the open.
Wall Street erased yesterday’s gains by 15:00 GMT and unlike yesterday, will probably close in the red. That’s because traders have accrued some decent profits this week and there is a lot of event risk ahead, including US government drama and the UK Brexit-deal vote. This morning's US CPI data didn’t have any impact. CPI fell 0.1% due to lower oil prices.
Former US President Ronald Reagan was sometimes called the “Great Communicator.” It is very unlikely that Fed Chair Jerome Powell will be referred to that way. He muddled the message from the December 19 Federal Open Market Committee meeting. Since then, he has been doing damage control, going from saying the Fed would continue to gradually raise rates to: “We are in a place where we can be patient and flexible and wait and see what does evolve,” yesterday. That sentiment echoed what other FOMC members were saying and was almost identical to his January 4 comments. Wall Street rallied all week but may use the weekend as an excuse to book some profits.
Next week should provide plenty of opportunity for traders. The UK parliament vote on Theresa May’s Brexit plan may be the highlight of the week unless President Trump does something stupid. GBPUSD soared Friday helped by an Evening Standard report that Brexit would be delayed. Most pundits believe Theresa May will lose Tuesday’s parliamentary vote. A JPMorgan analyst predicted a 4% GBPUSD rally if, Ms May achieves a surprise victory. Whatever happens, GBPUSD trading will be chaos.
There are plenty of inflation reports on the docket including those from the UK, US, Canada, Eurozone, and Japan. The UK data will be lost in the Brexit drama while the US data might not even arrive because of the government shutdown. Monday’s China Trade data will serve to keep the focus on the Beijing/Washington trade talks.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.