NY Open: Who let the bears out?
FX Trader, Loonieviews.net
Summary: There's a storm blowing down Wall Street as yesterday's tech rout gathers pace and blasts leading indices lower still, while in FX, a resurgent greenback picks off the G10 majors.
There were a lot of concerns spooking traders including falling Apple (AAPL: Nasdaq) shares and the news that Morgan Stanley told clients “we are in a bear market.” Other analysts think that Morgan Stanley may have jumped the gun. They point to a still robust economy, and the prospect for the pace of Fed rate hikes slowing. Also, the S&P 500 needs to drop below 2352.73 which is 20% from its September peak, to qualify as a bear market.
The stampeding equity bears flushed G-10 major currencies into the jaws of the greenback. The US dollar turned a mixed New York opening into steady gains led by a drop in the Canadian, and New Zealand dollars. Another plunge in WTI oil prices boosted USDCAD while weaker than expected GlobalDairyTrade auction results pummelled kiwi. NZDUSD snapped the uptrend from the beginning of November with the break below 0.6840. A move below support at 0.6790 would extend losses to 0.6705. EURUSD was weighed down by a rebound in October US Housing starts. Traders ignored the 0.6% drop in Permits.
Oil prices are another victim of the resurgent US dollar. WTI oil dropped from $57.00/barrel at the New York open to $53.66/b as of 1415 GMT. The dollar’s strength just exacerbated existing selling pressure from concerns that the prospect of slowing global growth due to the China/US trade war and rising US production would more than offset supply disruptions from Iran sanctions and Opec supply cuts.