FX traders' Bohemian Rhapsody
FX Trader, Loonieviews.net
Summary: Fed Chair Jerome Powell delivered his semi-annual Monetary Policy Report to the US Senate. Traders were left wondering “Is this the real life? Is this just fantasy?
He also said, “Going forward, our policy decisions will continue to be data dependent and will take into account new information as economic conditions and the outlook evolve.”
The comments were not anything new, leaving traders looking for news on the US/China trade front and humming “Scaramouch, Scaramouch will you do the fandango?”
FX markets may be suffering from “trade tweet fatigue”. The usual risk-on rallies that follow a presidential tweet are missing in action today. Yesterday, Trump tweeted “China Trade Deal (and more) in advanced stages. Relationship between our two Countries is very strong. I have therefore agreed to delay U.S. tariff hikes. Let’s see what happens?” A few hours later he fired off another message saying “If a deal is made with China, our great American Farmers will be treated better than they have ever been treated before!”
Asia equity indices closed in the red and the marquee risk barometer, AUDJPY not only failed to rise, it dropped, falling from 79.64 to 79.16, where is sitting as of 13:32 GMT.
Trump’s trade tweets may have been ignored, but the Canadian dollar has not recovered from Trump’s tweeted complaint to Opec about high oil prices. USDCAD gained 1.0% since yesterday’s low and has failed to retrace any of the rally despite WTI oil bouncing from its overnight low of $55.05 to $55.81 (as of 140:0 GMT).
Wall Street followed Asia and European bourses lower, but even with this morning’s soft open, the major indices are up at least 5% for the month. Traders were a tad uneasy after the Case-Shiller Home Price index rose 4.2% in December, below the 4.5% that was expected. Housing starts were also below forecast, and 11.2% lower than November starts.
Quarterly Outlook Q2 2022
Quarterly Outlook Q2 2022: The End Game has arrived
- Shocks from covid and the war in Ukraine have forced the global financial and political world to change, but what will the end game be?
Productivity and innovation have never been more importantAs the world economy hits physical limits and central banks tighten their belts, could equities be facing a 10-15% downside?
The great EUR recovery and the difficulty of trading itIf the terrible fog of war hopefully lifts soon, the conditions are promising for the euro to reprice significantly higher.
Tight commodity markets – turbocharged by war and sanctionsWith supply already tight, commodities keep powering on. But will it last for yet another quarter?
Between a rock and a hard placeGeopolitical concerns will add upward price pressures and fears of slower growth, while volatility will remain elevated.
The Great ErosionInflation is everywhere and central banks try to combat it. But will they get it under control in time?
Australian investing: Six considerations amid triple Rs: rising rates, record inflation and likely recessionWhile global financial markets are struggling in an uncertain world, the commodity-heavy Australian ASX index is poised to keep a positive momentum.
Cybersecurity – the rush to catch up with realityWith the invasion of Ukraine, governments and private companies are rushing to reinforce their cyber defenses.
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