Inertia grabs a hold of FX markets
FX Trader, Loonieviews.net
FX markets are close to a state of inertia. The intraday to-ing and fro-ing in the major G-10 currency pairs is just noise, akin to the sound of beer sloshing in the glass as you move from the bar to the patio chair. Summer markets, a dearth of data, possible event risk and Thursday’s European Central Bank meeting have encouraged traders to stay on the sidelines.
President Trump has set the stage for a hostile meeting with European Union Council President Jean-Claude Juncker. His tweet last night says it all. “The European Union is coming to Washington tomorrow to negotiate a deal on Trade. I have an idea for them. Both the U.S. and the E.U. drop all Tariffs, Barriers, and Subsidies! That would finally be called Free Market and Fair Trade! Hope they do it, we are ready - but they won’t!” Hardly the words of a man expecting a positive result.
Wall Street opened flat. The DJIA was a tad lower while the S&P 500 and NASDAQ were modestly higher.
The US dollar drifted lower since New York opened, but only the Canadian dollar shows signs of breaking out of its recent range. USDCAD inched slowly lower after peaking at 1.3160 overnight. Prices broke below minor support in the 1.3120 area. USDCAD traders are optimistic about the trade talks around Nafta and are expecting a positive result to be announced shortly. Their optimism may be misplaced. US and Mexico trade representatives are meeting as are Canadian and Mexico reps, but Canada and the US aren’t talking. Earlier this week, President Trump appeared to put a Mexico trade deal ahead of a Canadian deal, and his feud with Canada’s Prime Minister Trudeau supports that view. Nevertheless, the intraday USDCAD technicals are bearish while prices are below 1.3150 with this morning’s drop below 1.3120 targeting support in the 1.3050-60 area.
Chart: USDCAD 4-hour
Source: Saxo Bank
Latest Market Insights
Quarterly Outlook Q3 2022: The Runaway Train
- Central banks' attempts to kill inflation is a paradigm shift, which could end in a deep recession.
Tangible assets and profitable growth are the winnersWith US equities officially in a bear market, the big question is where and when is the bottom in the current drawdown?
Understanding the lack of investment appetite among oil majorsThe everything rally seen in recent quarters has become more uneven, as its strength is driven by commodities in short supply.
The pressure is on as the wind leaves the sailsWith cryptocurrencies in sharp decline, are we entering a crypto winter or is the bear market a healthy clean-up of the crypto space?
Why the Fed can never catch up and what turns the US dollar lower?Many other central banks are set to eventually outpace the Fed in hiking rates, taking their real interest rates to levels higher than the Fed will achieve.
Bank of Japan: Swimming against the tideThe Japanese economy has gone from the age of deflation to rapidly rising prices in no time, leaving the Bank of Japan in a pickle.
Green transformation detour and bear market hibernationWith the impending risk of global econonomic derailment, we share the five things investors need to consider in this new half year.
Crisis redux for the eurozone?Whether there's going to be a recession in Europe or not, the path towards a stable economy will be agonizing.
Technical Outlook: Gold, Oil and a remarkable multi-decade perspective on EquitiesThe Nasdaq bubble pattern, USDJPY resistance, crude oil uptrend losing steam and the technical outlook for USD.
China: the train of new development paradigm left the station two years agoChina is transiting to a new development paradigm, as they are hit by deteriorating terms of trade, a slower global economy and an uncertain future while continuing attempts to contain the pandemic.