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.
The end of the road
Emboldened by surging crude oil prices, Saudi Arabia makes waves on the international stage, as Crown Prince Mohammed bin Salman manages to create a World Champions League, after buying the UEFA Champion League franchise.
As the world embraces GLP-1 obesity wonder drugs, the people next in line to get a prescription stop caring about dieting and exercising, figuring that the drug will later solve all of their weight-related health problems.
With the US budget deficit spiraling above 10% of the GDP, the government is desperate to foster demand for US Treasuries. Under intense pressure from the White House, Congress makes income from government bonds tax-free.
After a criminal group deploys the most deceptive AI deepfake ever seen, generative AI becomes a national security threat. With public distrust soaring, governments crack down with harsh new laws, puncturing the AI hype.
To fix the divergence in the global trade and financial system, the largest deficit countries unite to negotiate new world trade terms. For surplus countries, the reset of the global economic model is a painful adjustment.
As discontent with Biden and Trump rises to fever pitch, Robert F. Kennedy Jr sees his support rising inexorably in the polls. On November 5, Kennedy wins the US presidential election, ushering in a new era in US politics.
Stepping up Japan's economic transformation in 2024, PM Kishida brings in a host of populist policies to boost domestic demand. As the GDP growth rate hits 7%, the BoJ is forced to abandons its yield curve control policy.
As people wake up to how little tax Europe’s billionaires are actually paying, the EU Commission implements a wealth tax of 2%. The tax sends shockwaves through Europe's luxury industry, with luxury giant LVMH plunging 40%.
