NY Open: Verbal intervention guiding sentiment
FX Trader, Loonieviews.net
Summary: Markets are trying to stabilise after a very volatile end to 2018, and a rocky start to 2019, while various officials are trying talk them into the "right" direction.
This morning, US Secretary of Commerce Wilbur Ross was putting the US/China trade talks in a positive light saying “I think there’s a very good chance that we will get a reasonable settlement that China can live with, that we can live with and that addresses all of the key issues. And to me those are immediate trade. That’s probably the easiest one to solve.” His comments followed on the heels of a Chinese government spokespersons comments that his government had “the good faith, on the basis of mutual respect and equality, to resolve the bilateral trade frictions".
GBPUSD ticked higher, rising from 1.2732 to 1.2775 supported by a UK Guardian article that the EU will offer Theresa May an “exchange of letters” to help her win the January 15 vote. EURUSD inched higher as well, supported by the earlier better than expected Eurozone Retail Sales data. EURUSD is locked inside the 1.1220-1.1500 range which has contained price action since October 23/18. US ISM non-manufacturing PMI fell to 57.6, a tad worse than the 59.0 forecast.
USDCAD dipped despite a drop in WTI oil prices from $49.27/barrel to $48.83/b since the New York open. There is significant support in the 1.3310-30 area which should contain downside moves until after Wednesday’s Bank of Canada interest rate decision and Monetary Policy Report. The modestly better than expected Canada Ivey PMI dropped USDCAD back to its overnight low of 1.3333.
Wall Street opened flat. Traders may be reluctant to get too enthused about a recovery until they get more information from the current round of US/China trade talks. The extended US government shutdown may also be taking a toll.
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