FX Trader, Loonieviews.net
The world was looking grim when New York traders turned on their screens. The US threat of another $200 billion in tariffs against China had spooked traders during the overnight session. President Trump’s blustering at the NATO conference didn’t help to reassure markets, either.
However, Bank of France Governor and European Central Bank executive committee member Francois Villeroy managed to lift the shroud of gloom. All he said was that the ECB could raise rates “at the earliest through the summer of 2019.” Suddenly, EURUSD sellers became US dollar buyers, obviously preferring a long-term fantasy of Eurozone policy tightening over the short-term prospect of a full-blown trade war.
EURUSD rallied from 1.1698 to 1.1755, and the commodity currency bloc caught a minor bid. The rally got a bit of an assist from a 0.3% rise in US PPI. The intraday EURUSD uptrend is intact while prices are above 1.1705 with a break of resistance at 1.1790 extending gains to 1.1860.
USDJPY rallied despite the trade tensions but could break above resistance in the 111.40-111.60 area. A topside break would target 113.60 while a drop below 110.80 would lead to a retest of 110.20.
Wall Street was not impressed by ECB rate speculation preferring to focus on the more immediate risks posed by the US tariff plan. The Dow Jones Industrial Average is down 161.18 points while the S&P 500 sank 0.54% as of 13:50 GMT.
The Bank of Canada did not surprise anyone when it raised the overnight rate to 1.75% from 1.25%. The surprise was in the tone of the statement. It was hawkish. The bank expects the global economy to grow by about 3.75% in 2018 and said the Canadian economy was operating close to capacity, assuming 2.8% growth in Q2. The Monetary Policy Report press conference starts at 15:15 GMT . USDCAD, which had climbed to 1.3171 overnight and was sitting at 1.3135, when the statement was released, dropped to 1.30081. Support is at 1.3050 and 1.3005.
The market is trying to get back to the pre-Covid and pre-war times, but that model is broken. A new dawn is here and the financial world needs to adapt.
Steen Jakobsen,
Chief Investment Officer
A political switch in China towards less tough control of its people and companies may kick things back into gear.
Redmond Wong,
Market Strategist
While the economic situation in Europe may not be as bad as feared, there's still a plethora of things to fix.
Chris Dembik,
Head of Macroeconomic Research
As the world turns increasingly bipolar, equity markets face harsh times as they transition into the new reality.
Peter Garnry,
Head of Equity Strategy
New alliances and collaborations outside of China may lead to prosperous times in Asia.
Charu Chanana,
Market Strategist
For years, it was thought that the balanced portfolio was a thing of the past. But recent developments may have changed that.
Peter Siks,
Investment Coach
Following a dramatic and volatile 2022 with good returns, a lot of this year's commodity performance may be driven by Chinese politics.
Ole S. Hansen,
Head of Commodity Strategy
2023 could be a tough year for currencies but EUR and JPY may have some upside.
John J. Hardy,
Head of FX Strategy
The commodity-heavy Australian market may have a good start to 2023, as the Chinese focus on growth signals demand for Aussie resources.
Jessica Amir,
Market Strategist
From a near-perfect environment for speculative assets before 2022 to the opposite, crypto faces fundamental challenges.
Mads Eberhardt,
Cryptocurrency Analyst
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)
