Equities: New extremes and a challenging opportunity set
Discover insights on the future of equity markets in Q1 2024 and navigate the potential recession with strategic investment choices.
FX Trader, Loonieviews.net
Summary: The USD is going nowhere in a hurry as the market awaits some fresh data to enliven the scene. Meanwhile, Wall Street is clawing back opening losses and oil prices have snapped last week’s downtrend.
“Dollar up, dollar down, positions are moving ‘round and ’round.” American’s and Canadian’s returned to work after a long weekend and found plenty of angst, an empty data cupboard and little reason to get involved.
The US dollar at 1400 GMT is relatively unchanged since the New York open despite somewhat choppy trading. EURUSD broke below 1.1460 support, touched 1.1433 and is hovering around 1.1450. Prices are weighed down by ongoing risk aversion trades due to US/China trade concerns, yesterday’s China equity melt-down and rising Treasury yields.
Being a “slow news day,” the US dollar may have gotten a bit of support from Dallas Fed President Robert Kaplan who said he was comfortable with three more rate hikes over the next year, as it reminded traders that ECB rates weren’t going anywhere until next summer. The EU and Italy budget disagreement is another EURUSD negative. The intraday EURUSD technicals are bearish while prices are below 1.1500, a level being guarded by minor resistance in the 1.1460-70 area. A break below 1.1420 targets 1.1290.
Wall Street is clawing back opening losses. The Nasdaq is in positive territory, S&P 500 is flat and the DJIA, while in the red is above its worst levels. The improvement came as 10-year Treasury yields slipped from their European peak.
Oil prices snapped last week’s downtrend. WTI rallied from $73.08/barrel yesterday to $74.99/b just before the New York opening thanks to Hurricane Michael interrupting US Gulf coast production. Prices were also supported by reports that Iran crude exports had fallen. The Canadian dollar is not getting any support from the higher prices due to the enormous discount between Western Canada Select (WCS) and WTI which touched CAD 53.25 on Friday.
Chart EURUSD 30 minute
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