FX Trader, Loonieviews.net
FX markets will be busy this week... just not today. Traders are looking ahead to the Bank of Japan meeting tomorrow, the Federal Open Market Committee meeting Wednesday, and the Bank of England show on Thursday. If that’s not enough to worry about, money managers currently need to sell a sizeable amount of US dollars to satisfy portfolio rebalancing requirements at Tuesday’s 1600 GMT fixing time.
The week is chock full of top-tier US economic reports including Eurozone and Canada GDP on Tuesday; New Zealand employment data and China Manufacturing PMI on Wednesday, and US nonfarm payrolls on Friday.
FX traders may be a tad cautious while they wait to see if anything develops from President Trump’s threat to shut down the US government. Yesterday he tweeted “I would be willing to 'shut down' government if the Democrats do not give us the votes for Border Security, which includes the Wall! Must get rid of Lottery, Catch & Release etc. and finally go to system of Immigration based on MERIT! We need great people coming into our Country!”
Then he got distracted and sent a flurry of tweets railing against the Mueller investigation.
New York has been cautiously selling US dollars since it walked in, with the Canadian dollar the best performing G10 currency by a nose. Expectations of a robust May GDP print (forecasted at 0.3% versus April's 0.1%), firmer oil prices, a better outlook for Nafta, and potential month-end USDCAD selling have undermined USDCAD.
EURUSD and GBPUSD have traded higher on the back of the month-end flow story but EURUSD remains trapped inside last week’s 1.1620-1.1750 range.
Oil prices continued to be underpinned by escalating Iran/US tensions as the possible loss of Iran crude supply more than offsets the recent Opec production increase.
Wall Street opened with a negative bias. Tech stock concerns have pushed the NASDAQ lower while Caterpillar’s (CAT: NYSE) upgrade to its full-year profit outlook gave the DJIA a bit of support.
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
