Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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NY Open: Wall Street wobbly at the open
Michael O’Neill
FX Trader, Loonieviews.net
Summary: Equities are uncertain and forex is choppy at the New York open, as traders await Wednesday's Fed minutes release.
Wall Street opened in the red, but negligibly so, and then turned positive as of 14:00 GMT. The Dow Jones Industrial Average (DJIA) rose 2.9% last week and traders returned from a three-day weekend looking for inspiration. They didn’t find it. Walmart (WMT: Nasdaq) shares are up 3.8% in early trading after the retailer’s Q4 results were far better than expected. (Q4 eps $1.44 vs forecast $1.33). Traders were also impressed by the 43% jump in e-commerce sales. President Trump’s comments on Friday suggesting he was open to extending the deadline to raise tariffs has traders alert for headlines.
FX markets are choppy but well within recent ranges this morning. EUR, GBP, and CHF are higher while JPY and the commodity currency bloc are lower. EURUSD climbed from 1.1292 to 1.1320 as of 14:00 GMT even despite dovish comments from European Central Bank officials, hawkish comments from Cleveland Fed president Loretta Mester and talk of US auto sanctions against the EU coming down the pipe. Mester hedged herself, saying that rates may need to rise, but the Fed has time.
GBPUSD is higher, rising from 1.2890 to 1.2990, due in part, because of hopes that Wednesday’s Juncker/May meeting leads to concessions on the Irish border backstop. Stop losses were triggered on the break of 1.2950, opening the door to further gains to 1.3050.
USDCAD rallied from 1.3246 to 1.3279 because of GBPCAD demand and a drop in oil prices. WTI fell from $56.15 to $55.27 on profit taking and news that Iran’s oil exports rose in January.
Traders are reluctant to get too involved ahead of Wednesday’s release of the minutes from the January 30 Federal Open MarketCommittee meeting. The minutes will be parsed for insight into the Fed’s dovish flip when they removed the reference to “further gradual increases.”
FX markets are choppy but well within recent ranges this morning. EUR, GBP, and CHF are higher while JPY and the commodity currency bloc are lower. EURUSD climbed from 1.1292 to 1.1320 as of 14:00 GMT even despite dovish comments from European Central Bank officials, hawkish comments from Cleveland Fed president Loretta Mester and talk of US auto sanctions against the EU coming down the pipe. Mester hedged herself, saying that rates may need to rise, but the Fed has time.
GBPUSD is higher, rising from 1.2890 to 1.2990, due in part, because of hopes that Wednesday’s Juncker/May meeting leads to concessions on the Irish border backstop. Stop losses were triggered on the break of 1.2950, opening the door to further gains to 1.3050.
USDCAD rallied from 1.3246 to 1.3279 because of GBPCAD demand and a drop in oil prices. WTI fell from $56.15 to $55.27 on profit taking and news that Iran’s oil exports rose in January.
Traders are reluctant to get too involved ahead of Wednesday’s release of the minutes from the January 30 Federal Open MarketCommittee meeting. The minutes will be parsed for insight into the Fed’s dovish flip when they removed the reference to “further gradual increases.”
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