NY Open: The lull before the..... lull
FX Trader, Loonieviews.net
Summary: FX markets are largely treading water ahead of reaction by the Fed chair to the latest batch of US GDP numbers. Still, nobody expects Jay Powell to veer off course and stir them from their slumber.
FX markets are becalmed. This morning’s second reading of US Q3 GDP, at 3.5%, was unchanged from the “advanced” reading a month ago, leaving markets directionless and patiently awaiting Fed Chair Jerome Powell’s remarks, scheduled for 17:00 GMT.
FX traders appear to believe that Powell will not deviate from November 14 remarks where he expressed happiness about the state of the US economy, saying that markets will have to get used to the idea that the central bank could raise rates at any time starting in 2019.
The US dollar has recorded modest gains against the major G-10 currencies since the New York open. EURUSD is probing support at 1.1270 which if broken will lead to 1.1210 and then 1.1115. A break above 1.1290 would lead back to 1.1340.
Wall Street appears less concerned about a hawkish Jerome Powell and more focused on prospects for positive news on the trade front. Various media outlets are suggesting that President Trump and President Jinping will reach a compromise at their weekend meeting and avoid an escalation of the trade war. The three major indices are modestly higher in early trading but unlikely to rally much further until after Powell’s speech.