NY Open: Wall Street shrugs off its worries

Forex 4 minutes to read

Michael O’Neill

FX Trader, Loonieviews.net

Summary:  Wall Street is whistling a carefree tune today, but markets are keeping a cautious eye on the FOMC. In Canada, the loonie climbed somewhat in the wake of the BoC holding rates steady.


The Dow Jones Industrial Average popped at the open, along with the S&P 500 and Nasdaq. The DJIA soared 5.7% since touching 22,638.41 on January 3. The fear and loathing that followed the Federal Reserve rate hike on December 19, and Fed chair Powell’s apparent lack of concerned about the carnage in equity markets, has traders throwing caution to the wind.

"All is for the best in the best of all possible worlds" appears to be the message out of Manhattan again today, leaving us to wonder which unpleasant late-cycle reality will spoil the party first.

Traders are expecting to get some clarity on the Federal Open Market Committee’s outlook when the minutes are released this afternoon. Above all, markets want to find out whether the Committee unanimously shared Powell’s original hawkish bias, or if the chair's January 4 comments were a more accurate view of the bank's thinking.

If this mornings’ session is any guide, traders are leaning toward the latter.

FX markets are in “risk-seeking” mode. The US dollar sank across the G10 major currency spectrum since the New York open, led by gains in NZD and EUR. The "dovish Fed" bias was reinforced earlier after St. Louis Fed President and noted dove James Bullard said "we’ve got a good level of the policy rate toda”, and there isn’t any pressing need to go higher.”

EURUSD climbed from 1.1441 to 1.1531, which turned some technical studies bullish; these are looking for a break of resistance at 1.1550 to signal further gains ahead.

The Bank of Canada left interest rates unchanged which was expected. The statement was dovish. The BoC is concerned about slowing global economic growth from the ongoing China/US trade talks, and a “material” drop in oil prices. It trimmed its 2019 GDP growth forecast to 1.17% from 2.1%. 

USDCAD dropped to 1.3182 alongside the US dollar weakness and a jump in WTI oil prices to $51.46/barrel but bounced to 1.3210 as traders digested the latest monetary policy report.
EURUSD (daily, source: Saxo Bank)
Disclaimer

The Saxo 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 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 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 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 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 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)
- Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
3 Church Street, #30-00
Samsung Hub
Singapore 049483

All departments are available 08:30 to 17:30 Monday to Friday.

Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.