NY Open: Twenty pounds of headlines
Markets started the day in a confusion of incoming news as ECB chatter met with trade talk updates and US macro data. EURUSD took it on the chin and dropped from 1.1270 to 1.1235.
Saxo Bank head of equity strategy Peter Garnry is bullish the three big banks – JPMorgan, Wells Fargo, and Citi – reporting earnings ahead of today's US open. Citing expectations for strong trading income and commercial banking results, Garnry says that he could see equities rally throughout the earning season provided the negative macro surprise trend eases and there are no major new provocations on the political (read: President Trump) front.
In single shares, Garnry reports that British Airways parent IAG has taken a 4.6% stake in low-cost carrier Norwegian, boosting shares of the latter by 46% on speculation of an acquisition (IAG already owns low-cost carrier Vueling, as well as Aer Lingus and Iberia).
Saxo's equities head says that he fails to see the big synergies here and is surprised by the timing of the IAG bid.
In the FX space, Saxo Bank head of forex strategy John Hardy reports that EURGBP is in focus on what appears to be a major flow/technicals-driven drop below key support around 0.87, with Thursday's close around 0.8660 having the potential to open up room for a more protracted fall towards major support around 0.8300-0.8325.
They key upcoming factors here, Hardy says, are next week's UK data releases, which include producer prices and inflation prints on April 18.
Hardy also notes the yen's continued weakness with USDJPY pushing on resistance at 107.50 for a potential re-entry into the Ichimoku cloud above 108.00. In his view, the USDJPY rally does not yet look to be particularly dramatic but could extend if the current swell in risk appetite – due partially to President Trump's unexpected reversal on the Trans-Pacific Trade partnership – continues in the short- to medium-term.