Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
Access both platforms from your single Saxo account.
NY Open: Retail revisions give dollar some gains
Michael O’Neill
FX Trader, Loonieviews.net
Summary: The US dollar is set to close the week with large gains against the G10 while Brexit is holding both GBP and EUR back.
The US dollar opened in New York with gains and then added to those gains after the release of the November Retail Sales report. The headline result was as forecast but the ex-autos number, at 0.2% month-on-month, was a tick below expectations.
However, upward revisions to the October results for both categories gave the US dollar a boost.
However, upward revisions to the October results for both categories gave the US dollar a boost.
The US dollar is set to close the week with large gains against the G10 major currencies since last Friday’s New York close. GBPUSD led the currencies lower thanks to Brexit and UK politics, losing 1.4%. The New Zealand dollar and the euro were down 1.14% and 1.04%, respectively.
Wall Street is poised to open with a nasty downdraft as traders play defense. It is likely just pre-weekend jitters triggered by the weak China data overnight because the news on the US/China trade talks are positive. China announced that it was halting additional tariffs on US cars imports for three months, an obvious concession to the Americans.
The week ahead will be the last full week of trading for 2018. Liquidity will deteriorate on the approach to the Christmas, other seasonal holidays and year-end. The prospect of poor liquidity, major economic data releases, and Bank of England and Federal Open Market Committee meetings suggests plenty of opportunity for nimble traders.
European Central Bank President Mario Draghi was his usual dovish self during Thursday’s press conference. Eurozone CPI data on Monday could justify his bias if they are as weak as forecast (-0.2% versus October 0.2%).
Wednesday, UK inflation data is on tap and Thursday is the BoE meeting. Brexit developments have overshadowed both, but GBPUSD could still see some wild price action, especially if BoE governor Mark Carney goes off the reservation.
Wednesday's FOMC meeting is complete with a new Summary of Projections and a press conference. The CME Fedwatch tool suggests a 78.4% probability of a 0.25% rate increase. Arguably, the US dollar could get a “pop” on a rate hike. Markets will be more interest to see if the dot-plot forecasts are downgraded.
Wall Street is poised to open with a nasty downdraft as traders play defense. It is likely just pre-weekend jitters triggered by the weak China data overnight because the news on the US/China trade talks are positive. China announced that it was halting additional tariffs on US cars imports for three months, an obvious concession to the Americans.
The week ahead will be the last full week of trading for 2018. Liquidity will deteriorate on the approach to the Christmas, other seasonal holidays and year-end. The prospect of poor liquidity, major economic data releases, and Bank of England and Federal Open Market Committee meetings suggests plenty of opportunity for nimble traders.
European Central Bank President Mario Draghi was his usual dovish self during Thursday’s press conference. Eurozone CPI data on Monday could justify his bias if they are as weak as forecast (-0.2% versus October 0.2%).
Wednesday, UK inflation data is on tap and Thursday is the BoE meeting. Brexit developments have overshadowed both, but GBPUSD could still see some wild price action, especially if BoE governor Mark Carney goes off the reservation.
Wednesday's FOMC meeting is complete with a new Summary of Projections and a press conference. The CME Fedwatch tool suggests a 78.4% probability of a 0.25% rate increase. Arguably, the US dollar could get a “pop” on a rate hike. Markets will be more interest to see if the dot-plot forecasts are downgraded.
Latest Market Insights
Quarterly Outlook 2024 Q3
Sandcastle economics
-
-
Bonds: What to do until inflation stabilises
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain inflation and evolving monetary policies.
-
Equities: Are we blowing bubbles again
Explore key trends and opportunities in European equities and electrification theme as market dynamics echo 2021's rally.
-
FX: Risk-on currencies to surge against havens
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperform in Q3 2024.
-
Commodities: Energy and grains in focus as metals pause
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities in Q3 2024.
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research 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. To the extent that any content is construed as investment research, you must note and accept that the 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 under relevant laws.
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)