NY Open: Beware a 'Santa rally' in USD
FX Trader, Loonieviews.net
Summary: The greenback has steadily ticked higher since today's New York bell. Is this a sign of things to come?
The single currency is still below the 23.6% retracement level of the 2018 range, suggesting the rally is merely a correction.
GBPUSD rallied from 1.2530 to 1.2705 during the same time span despite rising risks of a “no-deal” Brexit. The Bank of England is concerned; it has left rates unchanged and said that Brexit risks are hurting the economy. It seems very unlikely that GBPUSD has a lot of upside from current levels in the present environment.
USDJPY collapsed from 113.64 to a low of 111.57. Sure, the move was a reaction to rising risk-aversion and sinking US Treasury yields, but prices are still above support in the 111.10- 111.40 area.
There is a lot of major data due on Friday, but arguably the conclusions from yesterday’s Federal Open Market Committee meeting and today’s BoE meeting render the data moot, providing a lot of incentive to square positions ahead of next week’s holidays. It could be happening now as the US dollar has steadily ticked higher since the New York open.
This morning’s US data were mixed and not really a factor for FX but more so for equities. The Philadelphia Fed Manufacturing Index was 9.4 versus a forecasted 15.0. Initial Jobless Claims were as expected.
Wall Street tipped into the rate at the open after looking like it would have a positive start a few hours earlier. Traders were unhappy with the news that the US has stepped up the pressure on China. The Washington Post reported that the Trump administration and a dozen other countries which include the UK, Canada, Japan and Germany are planning to condemn China for its efforts to steal trade secrets and advanced technology from other nations. Sanctions are expected.
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.
Technical Outlook: Gold, Oil and a remarkable multi-decade perspective on EquitiesThe Nasdaq bubble pattern, USDJPY resistance, crude oil uptrend losing steam and the technical outlook for USD.
China: the train of new development paradigm left the station two years agoChina is transiting to a new development paradigm, as they are hit by deteriorating terms of trade, a slower global economy and an uncertain future while continuing attempts to contain the pandemic.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)