NY Open: Soundbites and headlines keep traders on their toes

Forex 4 minutes to read

Summary:  FX markets are skittish. Top-tier US economic data is hard to find, and lingering effects from the late December equity market melt-down has seen currencies test both sides of recent ranges in the past week


GBPUSD is the posterchild for headline and soundbite-driven price action, although USDJPY is giving it a run for its money. The commodity currency bloc gave up overnight gains since New York opened, while sterling added to them. EURUSD is flat, with traders awaiting Thursday’s European Central Bank meeting.

GBPUSD is probing (and poking through) resistance from the downtrend line from May. It is at 1.3030 The 50% Fibonacci retracement resistance from May 2018-January 2019) is at 1.3040, which if decisively broken targets the 61.8% level of 1.3170. Short GBPUSD positions are getting squeezed by headlines suggesting that UK politicians finally realise that a “no-deal” Brexit may not be a good thing.

Traders are starting to believe that this gaggle of MPs will succeed in achieving in just 65 days, what two- plus years of negotiations failed to accomplish – a workable Brexit. EU chief negotiator Michel Barnier is ramping up the pressure. He said that the EU is open to several models of future trade while warning that time is running out. He also said that the UK is still on the hook for a sizable breakup fee, even if it is a non-deal.

USDCAD rallied on the back of weaker than expected retail sales data and the drop in WTI oil prices.

USDJPY climbed in a choppy fashion since January 14. The uptrend line from 108.00 is intact while prices are above 109.20. Today’s move above 109.64 snapped the mid-December downtrend with a move above 110.00 opening the door to a retest of 110.60. The Bank of Japan’s downgrade of 2019/2020 inflation expectations opened the door to possible easing at some point this year, although most economists believe such a move is unlikely.

Wall Street’s yo-yo-like price action continues. The three major US equity indices are well on their way to recouping yesterday’s losses. The DJIA is almost there, but the S&P 500 and NASDAQ still have a long way to go. Traders are optimistic that US politicians will shortly put an end to the government shutdown. White House Economic Advisor Larry Kudlow’s affirmation that US/China trade talks are continuing, helped sentiment.

USDJPY4-hour. Source: Saxo Bank

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)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.