FOREX 4 minutes to read

Wall Street fade is due to trade

Michael O’Neill

FX Trader, Loonieviews.net

Summary:  Equities headed south from the open in New York today. China/US trade headlines are having an outsized impact on Wall Street and FX markets because traders don’t have any hard data to evaluate.


The Dow Jones dropped 248.35 points to start the Tuesday session. It wasn’t alone. The S&P 500 and Nasdaq were also lower. Traders were antsy because the US/China trade talks look to be going off the rails. The promised tariff increase to 25% as of 12:01 am Friday has them spooked although more negotiations are scheduled for Wednesday. Prices have continued to slide in early trading.

Although there's precious little fresh data about,  last Friday’s nonfarm payrolls report is a distant memory and the next major data point, April CPI, isn’t available until Friday. Today’s JOLTS survey showed job openings increased 346,000 in March but it is third tier data and was ignored.

The US dollar opened in New York flat to slightly lower against the major G10 currencies. However, the whiff of risk aversion from Turkish and UK politics alongside the tariff threat led to broad-based demand. GBPUSD dropped 0.25%, falling as of 1400 GMT, from 1.3191 at the NY open to 1.3050, compared to its NY opening level over skepticism that talks between the Conservatives and Labour would bear any fruit. The intraday GBPUSD technicals are bearish while prices are below 1.3105. The break below 1.3060 (38.2% Fibonacci retracement of April 26, 1.2872 and May 3, 1.3176 range) targets further losses to the 61.8% Fibonacci level of 1.2988.

USDCAD rallied in concert with the broad US dollar demand and the drop in WTI oil prices. The Canada Ivey PMI index was 55.9, higher than the 53.0 forecast which may have served to slow topside moves.
Chart: GBPUSD hourly. Source: Saxo Bank
Disclaimer

The Saxo Bank 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 Bank 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 Bank 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 Bank 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 Bank 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 Bank 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)

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.