Quarterly Outlook
Q1 Outlook for Traders: Five Big Questions and Three Grey Swans.
John J. Hardy
Global Head of Macro Strategy
Strap yourself in for key market questions that must be answered in 2026.
NY Open: Beware a 'Santa rally' in USD
Michael O’Neill
FX Trader, Loonieviews.net
Summary: The greenback has steadily ticked higher since today's New York bell. Is this a sign of things to come?
The concept of a US dollar rally during the holiday-shortened week ahead is nothing to “ho, ho, ho" about. EURUSD climbed from 1.1272 last Friday to 1.1484 today – that’s 0.0212 points in conditions where the Federal Reserve is raising rates and maintains plans to do it twice more in 2019.
The single currency is still below the 23.6% retracement level of the 2018 range, suggesting the rally is merely a correction.
GBPUSD rallied from 1.2530 to 1.2705 during the same time span despite rising risks of a “no-deal” Brexit. The Bank of England is concerned; it has left rates unchanged and said that Brexit risks are hurting the economy. It seems very unlikely that GBPUSD has a lot of upside from current levels in the present environment.
USDJPY collapsed from 113.64 to a low of 111.57. Sure, the move was a reaction to rising risk-aversion and sinking US Treasury yields, but prices are still above support in the 111.10- 111.40 area.
There is a lot of major data due on Friday, but arguably the conclusions from yesterday’s Federal Open Market Committee meeting and today’s BoE meeting render the data moot, providing a lot of incentive to square positions ahead of next week’s holidays. It could be happening now as the US dollar has steadily ticked higher since the New York open.
This morning’s US data were mixed and not really a factor for FX but more so for equities. The Philadelphia Fed Manufacturing Index was 9.4 versus a forecasted 15.0. Initial Jobless Claims were as expected.
Wall Street tipped into the rate at the open after looking like it would have a positive start a few hours earlier. Traders were unhappy with the news that the US has stepped up the pressure on China. The Washington Post reported that the Trump administration and a dozen other countries which include the UK, Canada, Japan and Germany are planning to condemn China for its efforts to steal trade secrets and advanced technology from other nations. Sanctions are expected.
The single currency is still below the 23.6% retracement level of the 2018 range, suggesting the rally is merely a correction.
GBPUSD rallied from 1.2530 to 1.2705 during the same time span despite rising risks of a “no-deal” Brexit. The Bank of England is concerned; it has left rates unchanged and said that Brexit risks are hurting the economy. It seems very unlikely that GBPUSD has a lot of upside from current levels in the present environment.
USDJPY collapsed from 113.64 to a low of 111.57. Sure, the move was a reaction to rising risk-aversion and sinking US Treasury yields, but prices are still above support in the 111.10- 111.40 area.
There is a lot of major data due on Friday, but arguably the conclusions from yesterday’s Federal Open Market Committee meeting and today’s BoE meeting render the data moot, providing a lot of incentive to square positions ahead of next week’s holidays. It could be happening now as the US dollar has steadily ticked higher since the New York open.
This morning’s US data were mixed and not really a factor for FX but more so for equities. The Philadelphia Fed Manufacturing Index was 9.4 versus a forecasted 15.0. Initial Jobless Claims were as expected.
Wall Street tipped into the rate at the open after looking like it would have a positive start a few hours earlier. Traders were unhappy with the news that the US has stepped up the pressure on China. The Washington Post reported that the Trump administration and a dozen other countries which include the UK, Canada, Japan and Germany are planning to condemn China for its efforts to steal trade secrets and advanced technology from other nations. Sanctions are expected.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Q1 Outlook for Investors: “AI” party hangover needs discipline and diversification
Charu Chanana
Chief Investment Strategist
2026 is a high-valuation, high-dispersion year: the AI story matures, policy becomes less predictabl... -
Quarterly Outlook
Q4 Outlook for Investors: Diversify like it’s 2025 – don’t fall for déjà vu
Jacob Falkencrone
Global Head of Investment Strategy
-
Quarterly Outlook
Q4 Outlook for Traders: The Fed is back in easing mode. Is this time different?
John J. Hardy
Global Head of Macro Strategy
The Fed launched a new easing cycle in late Q3. Will this cycle now play out like 2000 or 2007? -
Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
-
Quarterly Outlook
Q3 Macro Outlook: Less chaos, and hopefully a bit more clarity
John J. Hardy
Global Head of Macro Strategy
After the chaos of Q2, the quarter ahead should get a bit more clarity on how Trump 2.0 is impacting... -
Quarterly Outlook
Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
Commodity Outlook: Commodities rally despite global uncertainty
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
Upending the global order at blinding speed
John J. Hardy
Global Head of Macro Strategy
We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ... -
Quarterly Outlook
Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever
Jacob Falkencrone
Global Head of Investment Strategy
Disclaimer