4 minutes to read

NY Open: Looking for direction in all the wrong places

Summary:  Today has seen financial markets seek direction from Italy, the UK, crude oil, and Tesla, but so far nothing has stuck.


On the soundtrack to the 1980 movie Urban Cowboy, Johnny Lee sang about “looking for love in all the wrong places.” Today, markets are doing the same with direction.

European traders thought they found direction in Italy. Comments about the benefits of leaving the euro by Italy First politician Claudio Borghi spooked markets, as did Deputy Prime Minister Luigi De Maio’s defence of the 2.4% budget deficit. Benchmark Italian yields climbed to 3.44% and European stock markets dropped, as did EURUSD. 

New York traders weren’t nearly as bothered by the European shift to risk-aversion trades. They sold US dollars across the board in a bottom-fishing, profit-taking move. They may be more concerned about Fed chair Powell’s speech titled “The Outlook for Employment and Inflation.” Realistically, other than the new US-Mexico-Canada agreement, there isn’t anything new since the post-FOMC meeting press conference last week.

The GBPUSD plunge has found a modicum of support above the European low of 1.2940 with prices probing 1.2977 as of 14:00 GMT, thanks in part to a weaker-than-expected ISM NY business conditions reading of 72.5 (August was 76.5).

The UK Conservative Party conference isn’t doing Sterling any favours, especially with Boris Johnston slamming Theresa May’s Brexit plan. Brexit issues should cap GBPUSD topside. The GBPUSD technicals are bearish below 1.3050 with a break of the 1.2920-30 area opening the door to further losses to 1.2670.

Wall Street is trading with a mixed tone around flat. Tesla (TSLA: xnas) continues to slide on Elon Musk’s woes despite news that deliveries improved in Q3.

Oil prices are continuing their steady climb toward $100/barrel. President Trump’s sanctions on Iran take effect November 4 and traders fear a supply shortage. The Canadian dollar is befitting from the rise in oil prices, despite the hefty discount for Canada’s benchmark crude, Western Canada Select.

Enlarge
USDCAD (daily, source: Saxo Bank)

You can access both of our platforms from a single Saxo account.

Disclaimer

The Saxo Bank 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 Bank 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 Bank 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 Bank 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 Bank 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 Bank 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/legal/disclaimer/saxo-disclaimer)