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Macro Outlook: The US rate cut cycle has begun
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Chief Investment Strategist
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NY Open: Risk-aversion ripples through New York
Michael O’Neill
FX Trader, Loonieviews.net
Summary: US stock markets are sounding a slight tentative note, but the January rally remains firmly intact in early trade.
A ripple of risk aversion is rippling through New York markets. Wall Street opened on the negative side of flat, Treasury yields are mixed, and the US dollar is firmer except against sterling. GBPUSD is higher, driving EURGBP lower in the process.
GBPUSD traders are acting as if the worst of Brexit is over with some pundits suggesting the risk of a “no-deal” Brexit is unlikely. That may be because they believe Theresa May will bow to Labour Leader Jeremy Corbyn’s demand to take the “no-deal” option off the table if she wants him to participate a new Brexit Plan B.”
GBPUSD climbed to 1.2922, from 1.2885 since New York opened, while EURGBP slipped to 0.8818 from 0.8853. EURUSD doesn’t appear to be reacting to news that the Senate Finance Chair Charles Grassley suggested that President Trump will put 25% tariffs on European autos to force the EU to the bargaining table.
The greenback eked out a little support from second-tier economic data. The Philadelphia Fed Manufacturing survey jumped to 17.0 from 9.1 in December, and the weekly Jobless Claims fell to 213,000.
USDCAD firmed on the back of softer WTI oil prices. News that US crude production was a record 11.9 million barrels per day offset positive sentiment from yesterday’s larger than expected decline in crude inventories, reported by the Energy Information Administration. Nevertheless, USDCAD is trapped inside a 1.3180-1.3380 trading band.
Wall Street was marginally lower as of 14:00 GMT. Morgan Stanley’s (MS: NYSE) fourth-quarter results were below estimates. Washington’s perusal of Huawei for stealing trade secrets dampened trade deal hopes. Those hopes had taken a turn for the better when it was announced that China Vice Premier Liu He would lead another trade delegation to Washington for talks on January 30. T
oday’s reasons for selling stocks are sketchy at best, and it wouldn’t be surprising to see Wall Street close with a gain.
GBPUSD traders are acting as if the worst of Brexit is over with some pundits suggesting the risk of a “no-deal” Brexit is unlikely. That may be because they believe Theresa May will bow to Labour Leader Jeremy Corbyn’s demand to take the “no-deal” option off the table if she wants him to participate a new Brexit Plan B.”
GBPUSD climbed to 1.2922, from 1.2885 since New York opened, while EURGBP slipped to 0.8818 from 0.8853. EURUSD doesn’t appear to be reacting to news that the Senate Finance Chair Charles Grassley suggested that President Trump will put 25% tariffs on European autos to force the EU to the bargaining table.
The greenback eked out a little support from second-tier economic data. The Philadelphia Fed Manufacturing survey jumped to 17.0 from 9.1 in December, and the weekly Jobless Claims fell to 213,000.
USDCAD firmed on the back of softer WTI oil prices. News that US crude production was a record 11.9 million barrels per day offset positive sentiment from yesterday’s larger than expected decline in crude inventories, reported by the Energy Information Administration. Nevertheless, USDCAD is trapped inside a 1.3180-1.3380 trading band.
Wall Street was marginally lower as of 14:00 GMT. Morgan Stanley’s (MS: NYSE) fourth-quarter results were below estimates. Washington’s perusal of Huawei for stealing trade secrets dampened trade deal hopes. Those hopes had taken a turn for the better when it was announced that China Vice Premier Liu He would lead another trade delegation to Washington for talks on January 30. T
oday’s reasons for selling stocks are sketchy at best, and it wouldn’t be surprising to see Wall Street close with a gain.
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