Summary: Markets are a tad skittish. The latest India/Pakistan skirmish in the disputed Kashmir region is causing a bit of angst as both nations have nukes.
Wall Street is also a little nervous about Trump’s former attorney Michael Cohen’s (who is also a former attorney, disbarred for a felony conviction for lying) testimony to Congress. Cohen’s opening statement calls Trump a racist, a conman and a cheat. He also apologised for lying at his previous testimony and promises that he isn’t lying at today’s testimony. Nevertheless, he may give Democrats more ammunition to threaten impeachment which could undermine risk sentiment.
US factory orders rose 0.1%, and monthly Pending Home Sales rose 4.6% in January which gave the US dollar a bit of support.
GBPUSD is the super-star currency over the past twenty-four hours, but the Canadian dollar is not a slouch. USDCAD touched 1.3232 yesterday and hit 1.3120 this morning thanks to a rebound in oil prices and Canadian inflation data that was “as expected.”
Thursday is month end and if Wall Street doesn’t close much lower than current levels, suggests portfolio managers will be selling US dollars against GBP, AUD and CAD for tomorrows fix.
Canada CPI rose 1.4%, year over year. It was well below December’s 2.0% rise, but the drop was primarily due to a 6.9% decline in energy costs. The data may have also been distorted due to a tweak in how airfares are calculated.
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