Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Chief Macro Strategist
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NY Open: Twenty pounds of headlines
Michael O’Neill
FX Trader, Loonieviews.net
Summary: Markets started the day in a confusion of incoming news as ECB chatter met with trade talk updates and US macro data.
Markets started the day like Bob Dylan's preacher – with 20 pounds of headlines stapled to their chest, and visibly reeling under the weight.
They came from Asia, Europe and the US, and they were full of talk about trade, about European Central Bank policies, and US data. In response, FX markets got a tad messy. Traders were digesting headlines regarding US/China trade talks just as the US economic data dropped, and headlines from ECB executive Benoit Coeuré's speech scrolled across screens on top of both.
Coeuré said that “the economic slowdown is stronger and broader than what we expected [and the] inflation path will be shallower," adding that new TLTRO is possible and the ECB is currently discussing it. That headline popped up as the New York Empire State Index rose to 8.6, beating the 7.0 forecast.
EURUSD took it on the chin and dropped from 1.1270 to 1.1235. Prices recovered quickly, supported by soft capacity utilisation and industri production reports and a strong opening on Wall Street. USDCAD got into the act as well; a surge in WTI oil prices to $55.53/b from $54.67/b at the open drove CAD higher. When the dust settled at 14:00 GMT, only AUD, NZD and CAD were a tad higher compared to the start. The rest were unchanged.
Chinese press headlines touting good progress around the trade talks followed by others suggesting talks are “inching toward a broad deal" lifted equity market sentiment. Wall Street opened with a pop although Nasdaq (+0.33%) traders didn’t seem as impressed as their Dow Jones Industrial Average (+1.08% as of 14:00 GMT) counterparts.
The week ahead will be a short one, at least for Canadians and Americans. Monday is a holiday, and a lack of top-tier data in any of the other G10 countries suggests it may be a quiet one for global markets. Wednesday’s release of the Federal Open market Committee minutes may be the highlight of the week, but they won’t add much to what traders already know – the Fed is patient and on hold.
The US-China trade talks continue, leaving “tape bombs” to negate the impact of economic data.
AUDUSD traders get to digest the Reserve Bank of Australia minutes on Tuesday, wage price data Wednesday and the employment report on Thursday. The impact of Wednesday’s UK employment data will be minimal due to Brexit issues.
There are plenty of top-tier Eurozone and US data at the end of the week; Eurozone (flash) PMIs and US Durable Goods are on Thursday, followed by German GDP and Eurozone inflation Friday.
They came from Asia, Europe and the US, and they were full of talk about trade, about European Central Bank policies, and US data. In response, FX markets got a tad messy. Traders were digesting headlines regarding US/China trade talks just as the US economic data dropped, and headlines from ECB executive Benoit Coeuré's speech scrolled across screens on top of both.
Coeuré said that “the economic slowdown is stronger and broader than what we expected [and the] inflation path will be shallower," adding that new TLTRO is possible and the ECB is currently discussing it. That headline popped up as the New York Empire State Index rose to 8.6, beating the 7.0 forecast.
EURUSD took it on the chin and dropped from 1.1270 to 1.1235. Prices recovered quickly, supported by soft capacity utilisation and industri production reports and a strong opening on Wall Street. USDCAD got into the act as well; a surge in WTI oil prices to $55.53/b from $54.67/b at the open drove CAD higher. When the dust settled at 14:00 GMT, only AUD, NZD and CAD were a tad higher compared to the start. The rest were unchanged.
Chinese press headlines touting good progress around the trade talks followed by others suggesting talks are “inching toward a broad deal" lifted equity market sentiment. Wall Street opened with a pop although Nasdaq (+0.33%) traders didn’t seem as impressed as their Dow Jones Industrial Average (+1.08% as of 14:00 GMT) counterparts.
The week ahead will be a short one, at least for Canadians and Americans. Monday is a holiday, and a lack of top-tier data in any of the other G10 countries suggests it may be a quiet one for global markets. Wednesday’s release of the Federal Open market Committee minutes may be the highlight of the week, but they won’t add much to what traders already know – the Fed is patient and on hold.
The US-China trade talks continue, leaving “tape bombs” to negate the impact of economic data.
AUDUSD traders get to digest the Reserve Bank of Australia minutes on Tuesday, wage price data Wednesday and the employment report on Thursday. The impact of Wednesday’s UK employment data will be minimal due to Brexit issues.
There are plenty of top-tier Eurozone and US data at the end of the week; Eurozone (flash) PMIs and US Durable Goods are on Thursday, followed by German GDP and Eurozone inflation Friday.
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