background image background image background image

NY Open: Reality intrusion blurs trade illusion

Equities 4 minutes to read
MO
Michael O’Neill

FX Trader, Loonieviews.net

Summary:  US markets gave up a good percentage of yesterday's gains into the open as new reports on the substance of the Sino-US trade discussion undercut the ultra-bullish narrative.


Wall Street opened with a thud. The Dow Jones Industrial Average, S&P 500 and Nasdaq gave back over half of yesterday’s gains by 14:00 GMT, as traders took direction from European and Asia price actions and the bond market. US 10-year Treasury yields are a few ticks higher than yesterday’s low, but the rally lacks conviction. Bond traders appear to believe that Fed chair Jerome Powell turned dovish and are downgrading their 2019 rate hike forecasts. Hopes that Powell would clarify his thoughts in Congressional testimony on Wednesday were dashed when his testimony was cancelled. 

Wednesday was declared a Day of Mourning to honour the late George H.W. Bush. All US government offices and Wall Street are closed.

Markets are also confused by the Trump/Xi dinner results. The White House press release about the dinner vastly differs from the statement from Beijing. Washington’s version has specific details, while China’s statement is vague. China doesn’t mention anything about reducing tariffs on US cars although Trump tweeted that tariffs would be removed.

The US dollar opened with losses against the G10 major currencies. Those gains have been eased somewhat in a nervous market. The economic data calendar is empty, which isn’t helping. USDCAD managed to scrape higher supported by renewed WTI oil selling pressure. The Canadian dollar is more sensitive to oil price moves lately, because of the Province of Alberta’s decision to cut production by 8.7% or 325,000 barrels/day. It is not an attempt to support Opec but rather a way of addressing rising inventory issues due to a lack of delivery capacity.

GBPUSD retreated from its New York opening level with prices dropping from 1.2819 to 1.2748, which is just above the overnight low of 1.2721. Traders appear to have re-evaluated the benefits to GBPUSD from the EU court opinion that the UK could unilaterally revoke Article 50. To many, that news just adds to the confusion ahead of the House of Commons vote on December 11.
GBPUSD
Source: Saxo Bank
Disclaimer

The Saxo 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 is not intended to and does not change or expand on this. 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 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 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 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 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 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-hk/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-hk/about-us/awards.

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.