NY Open: FX fading as Powell takes the stage NY Open: FX fading as Powell takes the stage NY Open: FX fading as Powell takes the stage

NY Open: FX fading as Powell takes the stage

Michael O’Neill

FX Trader, Loonieviews.net

It is the final weekend of August and for many, the month can’t end fast enough. Trade issues, tariffs, and Trump Tweets about the Fed’s interest policies led to a choppy trading environment. The US dollar is closing out the week with losses against the major G-10 currencies, led by a 1.40% rise in EURUSD from the New York close on August 17 to 1400 GMT today. The Japanese yen was the only loser, shedding 0.76%. The Australian dollar has almost erased all of its domestic political turmoil losses while the Canadian dollar is flat and directionless.

This morning’s release of US Durable Goods Orders data for July was worse than expected and led to fresh US dollar selling.
Wall Street opened in positive territory, undeterred by the soft Durable Goods data and apparently unconcerned about the Powell speech. Oil prices extended European gains, supported by the prospect of Iran oil sanctions limiting supply and the lack of negative fall-out from the US/China talks.

The report will be forgotten by the time Fed Chair Jerome Powell begins his speech (1400 GMT) Mr Powell is expected to reaffirm the Fed’s independence after President Trump's complaints about interest rates, earlier this week. This year’s Jackson Hole Symposium lacks the star power of other years. Bank of Japan Governor Haruhiko Kuroda, Bano of England Governor Mark Carney, and European Central Bank President Mario Draghi are missing in action.

Next week’s US data includes US Q2 GDP (forecast 4.0%) and on Wednesday and PCE index on Thursday. Key Eurozone data isn’t available until Friday when inflation and unemployment reports are released. Hire than expected core inflation could trigger EURUSD demand. Canada Q2 GDP (forecast 3.0%, y/y) will be critical for USDCAD traders. An upside surprise would boost the odds for a September 5 rate hike. The week will end with the US month-end portfolio rebalancing flows.

Sterling appears to be defying gravity. GBPUSD is in a one-week uptrend while prices are above 1.2810, looking for a test of resistance at 1.2940. The rally is despite the UK government releasing a host of Brexit papers and Chancellor of the Exchequer Philip Hammond warning of the economic consequences of a “no-deal” Brexit.

GBPUSD (four-hour)
GBPUSD (four-hour, source: Saxo Bank)

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.