FX Trader, Loonieviews.net
Summary: Wilting equities and rising yields have soured the mood and turned FX traders slightly risk averse.
Wall Street is teetering. Traders are not amused by the rally in US Treasury yields which jumped 1.9% since yesterday (10-year and 30-year). The Dow Jones Industrial Average (DJIA) and S&P 500 are down about 0.67% as of 14:00 GMT while the NASDAQ lost 0.84%
The slump in equity markets shifted FX traders to mildly risk averse. The US dollar has rebounded from opening losses and as of 14:00 GMT, posted gains against all the G-10 major currencies except the Japanese yen which is flat.
President Trump can take a bit of credit for the greenback’s gains. He turned his attention back to Mexico and immigration, tweeting: “ ...In addition to stopping all payments to these countries, which seem to have almost no control over their population, I must, in the strongest of terms, ask Mexico to stop this onslaught - and if unable to do so I will call up the U.S. Military and CLOSE OUR SOUTHERN BORDER!.. then following with this: ....The assault on our country at our Southern Border, including the Criminal elements and DRUGS pouring in, is far more important to me, as President, than Trade or the USMCA. Hopefully, Mexico will stop this onslaught at their Northern Border. All Democrats fault for weak laws!"
This morning’s FX moves should be taken with a grain of salt. Today’s Philadelphia Fed Manufacturing Survey is unchanged from September (Actual 22.2) while Initial Jobless Claims were a tad better than forecast. The US economy is booming, so the reports are supposed to be strong. The American economic calendar is empty on Friday, which suggests tomorrows Chinese GDP, Retail Sales and Industrial Production data may be the FX driver.
This morning’s US dollar rally has taken the bloom off the rose for AUDUSD. The post-employment report gains are fading after resistance stalled the rally at 0.7150 which is guarding June downtrend line resistance which comes into play at 0.7200. Weak China data combined with the bullish US interest rate outlook could lead to a retest of support at 0.7040.
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Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Uncover the shifting focus in 2024's FX markets towards growth resilience and relativity, away from bond yields and inflation stories.
Embrace the metal revolution on the commodity market in the coming year, with a focus on gold, silver, platinum, copper, and aluminum.
The gloominess of geopolitical conflicts and the repetitive nature of political agendas. What else does 2024 hold in store for us?
The disheartening cycle of unresolved geopolitical conflicts, the rise of polarizing political parties, and the stagnation of productivity.
Understand China's political landscape in Q4 2023 and the impact on counter-cyclical initiatives, with a focus on the pivotal Q1 2024.
