Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
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NY Open: Dollar starts November on feet of clay
Michael O’Neill
FX Trader, Loonieviews.net
Summary: Risk sentiment is strong into November, but it isn't doing US dollar bulls any favours with both GBPUSD and USDJPY in focus into the New York session.
The dollar is in full retreat. Month-end portfolio rebalancing flows have faded, global equity market sentiment is cautiously positive, and the Bank of England policy statement and Quarterly Inflation Report were largely as expected.
The BoE left the repo rate unchanged at 0.75%, suggested that rates would rise if the economy grew as predicted and then hedged everything by repeating its forecasts were based on an “orderly” Brexit.
The US dollar added to its overnight losses on the back of improved risk sentiment. US ISM Manufacturing PMI was 57.7, below the 59.0 expected and 59.8 recorded in September. USDJPY dropped through the 112.70 overnight low as 10-year US Treasury yields eased. The intraday technicals are bearish while prices are below 113.00 looking for a test of support at 112.50. GBPUSD climbed from a New York low of 1.2865 to 1.2933. The short-term technicals have flipped to bullish supported by the break above the downtrend line at 1.2830 overnight. A decisive break above the 1.2925-35 area targets 1.3030.
The steep oil price slide that started October 10 shows no signs of easing. WTI oil dropped from $74.90/barrel to $64.68/b overnight. Prices have bounced to $65.02/b, but the downtrend is intact below $66.30 on a four-hour chart. Traders are more concerned about rising crude inventories and the risk of slowing global growth and less worried about the US sanctions on Iran.
Wall Street opened on a positive note, boosted by the China-induced jump in global equity indices. Better than expected quarterly earnings reports and comments by Treasury Secretary Larry Kudlow that new tariffs on China imports could still be avoided, supported prices. Traders are looking ahead to Apple’s (AAPL: Nasdaq) quarterly earnings after the closing bell today. Apple is expected to generate earnings of $2.78/share on $60-$62.0 billion in revenue.
The BoE left the repo rate unchanged at 0.75%, suggested that rates would rise if the economy grew as predicted and then hedged everything by repeating its forecasts were based on an “orderly” Brexit.
The US dollar added to its overnight losses on the back of improved risk sentiment. US ISM Manufacturing PMI was 57.7, below the 59.0 expected and 59.8 recorded in September. USDJPY dropped through the 112.70 overnight low as 10-year US Treasury yields eased. The intraday technicals are bearish while prices are below 113.00 looking for a test of support at 112.50. GBPUSD climbed from a New York low of 1.2865 to 1.2933. The short-term technicals have flipped to bullish supported by the break above the downtrend line at 1.2830 overnight. A decisive break above the 1.2925-35 area targets 1.3030.
The steep oil price slide that started October 10 shows no signs of easing. WTI oil dropped from $74.90/barrel to $64.68/b overnight. Prices have bounced to $65.02/b, but the downtrend is intact below $66.30 on a four-hour chart. Traders are more concerned about rising crude inventories and the risk of slowing global growth and less worried about the US sanctions on Iran.
Wall Street opened on a positive note, boosted by the China-induced jump in global equity indices. Better than expected quarterly earnings reports and comments by Treasury Secretary Larry Kudlow that new tariffs on China imports could still be avoided, supported prices. Traders are looking ahead to Apple’s (AAPL: Nasdaq) quarterly earnings after the closing bell today. Apple is expected to generate earnings of $2.78/share on $60-$62.0 billion in revenue.
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