FX Trader, Loonieviews.net
Summary: An upbeat end to a dreary January week sees the US dollar bouncing higher on the back of a monster nonfarm payrolls beat.
US nonfarm payrolls delivered another blow-out result. The US added 312,000 new jobs in December, handily beating the consensus forecast of 176,000. The greenback is higher across the board against the G-10 major currencies with EUR and JPY tied for the worst performing currency ribbon. The Canadian dollar was the only currency to rally, and that is due to rising oil prices.
EURUSD snapped an intraday uptrend with its move below 1.1390 with a break below 1.1320 opening the door to further losses to 1.1270.
Traders are still cautious and reluctant to get involved ahead of Fed Chair Jerome Powell’s remarks this morning. Powell is on a panel with former Fed chairs, Ben Bernanke, and Janet Yellen. Traders are hoping to glean some fresh insight into the Fed’s interest rate outlook in light of the recent equity market volatility.
Wall Street opened in positive territory, as did the S&P 500 and the Nasdaq, buoyed by a mix of profit-taking, the robust NFP report and a bit of optimism because of the new US/China trade talks. The applause is muted as the indices need to recover a lot of ground to recoup yesterday’s losses and get back to Tuesday’s peak levels.
The week ahead is the first full week of trading for 2019 which also means an improvement in market liquidity. US/China trade talk speculation and a rehashing of today’s Powell panel discussion will be the dominant themes on Monday. Wednesday will be busy. The Bank of Canada quarterly Monetary Policy Report, Interest rate decision and Governor’s press conference will compete for attention with a speech by Bank of England Governor Mark Carney and the release of the Federal Open Market Committee's minutes from the December 19 meeting. The week will end with a bang thanks to Australia Retail Sales data, German and Eurozone ZEW surveys, UK trade and GDP numbers and the US inflation report.
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.
